STOCK FOCUS OF THE DAY
British American Tobacco: Illicit clampdown priced in HOLD
We downgrade our recommendation to HOLD from BUY on British American Tobacco (BAT). Current valuations appear to have priced in both the soft earnings and the potential clampdown on illicit cigarettes. We adjust our DCF-derived fair value to RM36.20/share (previously, RM36.00/share) in tandem with our new assumptions.
BAT recorded 1Q18 core earnings of RM96mil (QoQ -6.5%, YoY -20.0%) for the quarter against a revenue base of RM638mil (QoQ -8.9%, YoY -14.8%). Results came in below our and consensus expectations, at 17% and 18% of estimates respectively. The deviation was due to the dilutive impact arising from Rothmans. An interim dividend of 33 sen/share was declared. This was below our expectation of 48 sen/share.
Others :
Magnum: Boosted by lower prize payout HOLD
Only World Group: Tempered excitement HOLD
Petronas Chemicals: Pricing in higher oil prices HOLD
Tan Chong Motor: Finding niche opportunities HOLD
RETAIL RESEARCH
Stocks On Radar: Handal Resources, Comfort Gloves, KPS Consortium, Hiap Teck Venture
ECONOMIC HIGHLIGHT
Thailand: Economy remains favourable in 2018
Malaysia: Expect slight increase in April’s inflation
NEWS HIGHLIGHTS
Stockbroking Industry: Kenanga in talks to buy Interpac
Hengyuan: 1Q net profit down 68.9% on lower crack spread
SL Information: Makes strong debut on LEAP Market
MRCB: Is no more a ‘single-project’ company
DISCLAIMER:
The information and opinions in this report are 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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