[%UwYd%]
Research by HLIB
Sell (from Hold) – TP RM6.47

“A weak start"

BAT’s 1Q24 core PAT of RM32.3m (-29.2% QoQ, -20.9% YoY) missed both our and consensus expectations, accounting for only 15% of full-year forecast. Sales saw a significant 35.2% QoQ decline due to a drop in market share and a rise in illici market share. Additionally, the down-trading trends that led to lower sales in Premium and AP brands further pressured the group’s margins. In anticipation of a shrinking combustible cigarette market amidst the growing prevalence of vape products, we have cut our FY24f and FY25f earnings by 30% and 34%, respectively. Consequently, we downgrade the stock to SELL rating with a lower target price of RM6.47 (WACC: 9.5%; TG: 0.0%).

Analyst:
Sam Jun Kit
[%KpIL%]

$KLSE-BAT
Research by HLIB
Sell (from Hold) – TP RM6.47

“A weak start"

BAT’s 1Q24 core PAT of RM32.3m (-29.2% QoQ, -20.9% YoY) missed both our and consensus expectations, accounting for only 15% of full-year forecast. Sales saw a significant 35.2% QoQ decline due to a drop in market share and a rise in illici market share. Additionally, the down-trading trends that led to lower sales in Premium and AP brands further pressured the group’s margins. In anticipation of a shrinking combustible cigarette market amidst the growing prevalence of vape products, we have cut our FY24f and FY25f earnings by 30% and 34%, respectively. Consequently, we downgrade the stock to SELL rating with a lower target price of RM6.47 (WACC: 9.5%; TG: 0.0%).

Analyst:
Sam Jun Kit
jksam@hlib.hongleong.com.my

$BAT / 4162 (BRITISH AMERICAN TOBACCO (MALAYSIA) BERHAD)