British American Tobacco is one of the world's leading tobacco groups with its brands sold in more than 180 markets worldwide. The company has over 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.
BTI is regarded as a defensive play with strong brands and pricing power. The business also remains committed to paying an attractive dividend, which shows confidence in the outlook and business model.
Technically, the share is trading within the second phase (also known as a momentum frenzy) of a two-phased bullish trend (see the first chart). In this phase, broader market activity of the share increases, with algorithmic and retail trading picking up. This phase is usually accompanied by high volatility and significant trading volumes, with the price often driven by news events, retail buying, and sector rotation
The share is trading below its 200-day simple moving average (SMA) of ~R630 and is approaching this critical resistance level. A break above this level will confirm the bullish trend and signal a further move toward the upside.
Upside price momentum according to the MACD indicator, the formation of a trough on the Coppock Curve, as well as sidewards movement of the On-Balance Volume indicator, support our bullish stance.
Share Information
| Share code | BTI |
|---|---|
| Industry | Food, Beverage & Tobacco |
| Market Capital (USD) | 1.38 trillion |
| One year total return | -5.07% |
| Return year-to-date | -4.36% |
| Current price (USD) | 618.27 |
| 52 Week high (USD) | 744.44 |
| 52 Week low (USD) | 590.65 |
| Financial year end | December |
| Closing paragraph | The share is trading just above its 52-week lows with various technical indicators pointing toward a further recovery in the price. Expect moderate-to-high volatility going forward. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 74.92 | 90.18 | 93.99 | 101.18 |
| Growth (%) | 20.37 | 4.22 | 7.65 | |
| Dividend Per Share (USD) | 46.58 | 57.61 | 60.14 | 64.29 |
| Growth (%) | 23.68 | 4.39 | 6.90 | |
| Forward PE (times) | 6.77 | 6.35 | 6.21 | |
| Forward Dividend Yield (%) | 9.45 | 10.03 | 10.23 | |
| Closing paragraph | The market expects earnings growth to be strong over FY23 and to stabilise over the medium term. | |||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position |
QLT - BUY (Continue to hold) |
INL - BUY (Continue to hold) |
LHC - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 18.95 | 105.00 | 20.53 |
| Current | 20.96 | 110.36 | 20.79 |
| Movement | 10.6% | 5.1% | |
| Summary text |
The share remains above its 200-day simple moving average and continues to form a base. Upside momentum in the price supports the trade.
Our profit target is R22.50, with a trailing stop-loss at R19.40. Exit the trade around 30 October 2023. |
Based on the RRG analysis, the share remains attractively priced (particularly due to its ability to stay above the 200-day simple moving average). Upside momentum remains supportive.
Our profit target is R121, with a trailing stop-loss at R104. Exit the trade around 30 October 2023 |
The price appears to be in the upper range of a declining channel pattern, and this remains of interest. The share remains above its 200-day simple moving average. Upside momentum has halted, however, and this is a concern.
Our profit target is R27, with a trailing stop-loss at R18. Exit the trade around 6 November 2023. |
| Share Name and position |
ANH - BUY (Continue to hold) |
STXRES - BUY (Continue to hold) |
DCP - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 1 061.66 | 59.63 | 24.12 |
| Current | 1 074.23 | 57.57 | 23.25 |
| Movement | 1.2% | -3.5% | -3.6% |
| Summary text |
The price action seems to be forming a base. The share continues to test the 200-day simple moving average. Fading downside momentum is supportive of the trade.
Our profit target is R1 174, with a trailing stop-loss at R1 026. Exit the trade around 13 November 2023. |
The ETF is trading above major support levels and remains within an accumulation phase. Trading continues below the 200-day simple moving average, and we maintain a counter-trend strategy. Fading downside momentum is supportive.
Our profit target is R69, with a trailing stop-loss at R56. Exit the trade around 8 January 2024. |
The share continues to display signs of a bullish divergence. The share remains below its 200-day simple moving average, and we maintain a counter-trend strategy. The price action also seems to be building a base.
Our profit target is R29, with a trailing stop-loss at R22. Close the position around 29 December 2023. |
