British American Tobacco is one of the world's leading tobacco groups, with brands sold in more than 180 markets worldwide. With more than 200 brands in its portfolio, including Dunhill, Kent, and Lucky Strike, BTI makes the cigarette chosen by one in eight of the world's one billion adult smokers. The company holds robust market positions in each of its operating regions and enjoys leadership in more than 50 markets.
The company is regarded as a defensive play with strong brands and pricing power. The business has also committed to paying dividends, which shows confidence in the outlook and business model.
Technically, the price is in an inclining channel pattern making the share attractive as an investment opportunity (see the black parallel trendlines on the main chart).
The pattern is formed by trendlines that connect the higher lows and higher highs of the price, signalling an overall bullish trend. It also reflects a consolidation phase within the broader uptrend as buyers gain momentum for the next upward move.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R995. This classifies our profit target of R693 as realistic. We suggest a medium capital at-risk allocation to this trade.
Share Information
| Share code | BTI |
|---|---|
| Industry | Food, Beverage & Tobacco |
| Market Capital (ZAR) | 1402.19 billion |
| One year total return | -3.52% |
| Return year-to-date | 5.16% |
| Current price (ZAR) | 627.00 |
| 52 weeek high (ZAR) | 744.44 |
| 52 week low (ZAR) | 595.38 |
| Financial year end | December |
| Closing paragraph | The stock remains below its 200-day simple moving average; therefore, this trade is regarded as a countertrend trade. Several technical indicators point to further upside in the share price. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (GBP) | 3.71 | 3.81 | 4.03 | 4.40 |
| Growth (%) | 2.53 | 5.78 | 9.33 | |
| Dividend Per Share (GBP) | 2.31 | 2.41 | 2.52 | 2.70 |
| Growth (%) | 4.24 | 4.78 | 7.18 | |
| Forward PE (times) | 6.93 | 6.55 | 5.99 | |
| Forward Dividend Yield (%) | - | 9.13 | 9.56 | 10.25 |
| Closing paragraph | Earnings are decent and expected to pick up over the longer term. The dividend yield remains attractive | |||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | LHC - Time exit (Close the position) | TFG - BUY (Continue to hold) | CFR - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 19.30 | 83.54 | 3 060.92 |
| Current | 20.28 | 94.02 | 3 205.52 |
| Movement | 5.1% | 12.5% | 4.7% |
| Summary text | The share reached our time exit and we closed the position |
The stock continues to trade below its 200-day simple moving average. Upside momentum regained some strength, supportive of the trade idea.
Our profit target is R132, with a trailing stop-loss of R75.50. Exit the trade around 8 July 2024. |
The price is at the start of an impulse wave based on Elliott wave theory, which remains of interest. Remains above its 200-day simple moving average
Our profit target is R3 506, with a trailing stop-loss of R3 025. Exit the trade around 4 September 2023. |
| Share Name and position | MTN - BUY (Continue to hold) | OMU - BUY (Continue to hold) | INL - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 132.49 | 11.67 | 105 |
| Current | 138.15 | 12.12 | 106.02 |
| Movement | 4.3% | 3.9% | 1% |
| Summary text |
We continue to monitor the share price which suggests that the market may be entering stage 3 of the Elliot Wave pattern. The stock remains above its 200-day simple moving average. Upside momentum supports the bullish bias.
Our profit target is R190, with a trailing stop-loss at R114.30. Exit the trade around 6 November 2023. |
The price displays a potential reversal of the bearish trend. The share remains above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is R16, with a trailing stop-loss at R10.25. Exit the trade around 17 November 2023. |
The price is noteworthy based on RRG analysis, particularly due to its ability to stay above the 200-day simple moving average. Fading downside momentum supports the idea.
Our profit target is R121, with a trailing stop-loss at R99.70. Exit the trade around 7 August 2023. |
