Fast take: BAT replenish on Q3 earnings beat

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KUALA LUMPUR: British American Tobacco (M) Bhd’s (BAT) shares climbed in early commerce Friday after it reported better-than-expected earnings within the third quarter.

The tobacco firm rose 2.77%, or 40 sen to RM14.84, making it the third prime gainer on Bursa Malaysia.

BAT’s web revenue for the third quarter ended Sept 30 (3Q21) rose 23.43% to RM78.68mil from RM63.74mil a 12 months in the past.

Quarterly, nevertheless, fell 2.31% to RM613.02mil from RM627.52mil final 12 months.

It declared a 3rd interim dividend of 26 sen per share, amounting to RM74mil, to be paid out on Nov 25.

For the primary 9 months to Sept 30, BAT posted a web revenue of RM213.4mil on income of RM1.77bil.

Kenanga Analysis mentioned regardless of the FMCO, BAT’s 9MFY21 outcomes beat its expectations, accounting for 85% of its estimate.

“We imagine the constructive bump got here from the stringent measures in place to fight the illicit tobacco commerce.

“With the reopening of the financial system, we count on 4QFY21 to proceed to be stellar; thus, we raised our FY21E/FY22E earnings by +10%/+7%,” it mentioned.

Kenang has reiterated its “outperform” on BAT with the next goal worth of RM16.70 from RM15.70 beforehand.

TA Securities Analysis mentioned BAT’s 9MFY21 core earnings of RM219.9mil got here in inside expectations at 76% and 80% of the home and consensus full-year estimates respectively.

The analysis home famous that the extent of illicit commerce has dropped to 58% from 64% in end-2020 and the authorized trade quantity has grown 6% year-on-year.

“We imagine the enterprise panorama of authorized cigarette gamers would proceed to enhance with the lifting of motion restrictions and concerted efforts in clamping down illicit actions.

“For Price range 2022 which will probably be introduced right now, the administration hopes the federal government would come with additional measures to curb the illicit cigarette market and depart tobacco excise obligation established order. Individually, BAT additionally advocates for the introduction of a regulated nicotine vape framework,” TA Securities mentioned.

It has maintained a “purchase” name on BAT with an unchanged goal worth of RM15.70 per share based mostly on an unchanged discounted money move valuation.



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