FW: AmBank Research - BRITISH AMERICAN TOBACCO: Runaway Rothmans success, 14 Feb 2018

 

 

BRITISH AMERICAN TOBACCO: Runaway Rothmans success         Buy

 

British American Tobacco (M) (BAT)saw the successful launch of its Rothmans brand. While it could be dilutive on margins in the near term, we are convinced on its longer term value creation. We affirm our BUY call on BAT with a tweaked DCF-derived FV of RM36.00/share (WACC: 7.2% terminal growth: -1.0%).

Valuations are trading at a multi-year low. It is currently trading at a forward P/E of 16.5x, well below its -2SD of 17.6x. At these levels, the reward to-risk appears attractive, especially when valuations eventually mean-revert. Apart from that, we like BAT’s more adaptable business model and capped downside risks.

 

Others :

BOILERMECH: Squeeze in margin from stronger MYR?    Hold

MISC: Weak seasonal tanker rebound    Hold

ONLY WORLD    GROUP: The TOP@Komtar anchors earnings       Hold

 

 

STOCKS ON RADAR

SKP Resources, Econpile Holdings, Notion VTec, Advancecon Holdings

 

 

ECONOMIC HIGHLIGHTS

UK – Rate hike on the table

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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