Wednesday, April 24, 2013

BAT- bottom-line inched up

Result Update
For QE31/3/2013, BAT's net profit increased by 4% q-o-q or 5% y-o-y to RM204 million while revenue rose 5% y-o-y but unchanged q-o-q at RM1.096 billion. Revenue increased y-o-y due to higher contract manufacturing volume (+RM94 million) which was partially offset by lower domestic volume (-RM41 million). Operating profit rose 3.8% y-o-y due to 24.2%-drop in operating expenses (such as RM12 million decline in timing of merchandising & branding expenses and the absence of reforestation impairment expenses of RM8 million).

Table: BAT's last 8 quarterly results

Chart 1: BAT's last 25 quarterly results


BAT (closed at RM62.46 yesterday) is now trading at a PE of 22 times (based on the last 4 quarters' EPS of 283 sen). BAT paid out a dividend of RM2.75 for the last 4 quarters; thus giving a Dividend Yield of 4.4%. While BAT is deemed fully valued as per its PE multiple, it is still a good stock to own for income.

Technical Outlook

BAT is in an uptrend but its uptrend is now capped by the overhead line connecting the recent peaks (at RM67.00. Until a breakout is attained, BAT is likely to trade sideway with an upward bias.

Chart 2: BAT's daily chart as at April 23, 2013 (Source: quickcharts)

Based on good financial performance and good dividend payout, BAT is a good income stock for long-term. However, its valuation is elevated and the technical outlook is neutral. My rating for BAT is HOLD.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, BAT.

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