Peet Serfontein & Motheo Tlhagale
We initiate a long position. Our upside target is set at R1 042. We recommend a stop-loss at R895.
British American Tobacco is one of the world's largest tobacco companies, with products sold in approximately 180 markets. Its combustible portfolio includes well-known brands such as Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans.
BTI is regarded as a defensive stock thanks to its strong brands, global scale, and pricing power. The business generates substantial cash flow, enabling consistent shareholder returns and an attractive dividend yield.
A developing Bullish Pennant pattern in the price makes the share an interesting candidate for a long position (see the black converging trendlines on the main chart) - this is typically viewed as a continuation pattern within an existing uptrend. A confirmed breakout above the upper boundary would signal a potential resumption of the prior advance.
A constructive seasonal tailwind supports a positive outlook for the share, with its performance historically improving from May onwards. This period marks the start of stronger average returns through mid year and into an especially favourable stretch in the fourth quarter, reinforcing a bullish bias and increasing the likelihood of sustained upside momentum.
| Share Information | |
|---|---|
| Share Code | BTI |
| Industry | Food, Beverage & Tobacco |
| Market Capital (ZAR) | 2130.73 billion |
| One Year Total Return | 32.07% |
| Return Year-to-Date | 5.81% |
| Current Price (ZAR) | 981.93 |
| 52 Week High (ZAR) | 1,042.94 |
| 52 Week Low (ZAR) | 730.02 |
| Financial Year End | December |
| The price is holding above the 200-day simple moving average (SMA) at R929.66, confirming it as key support and reinforcing the bullish trend. We suggest a medium capital at-risk allocation to this trade - increase exposure for a break above R999. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY25 | FY26E | FY27E | FY28E | |
| Headline Earnings per Share (ZAR) | 3.52 | 3.62 | 3.88 | 4.17 |
| Growth (%) | 2.93 | 7.06 | 7.47 | |
| Dividend Per Share (ZAR) | 2.45 | 2.51 | 2.59 | 2.67 |
| Growth (%) | 2.43 | 3.15 | 3.28 | |
| Forward PE (times) | 11.96 | 11.17 | 10.39 | |
| Forward Dividend Yield (%) | 5.79 | 5.97 | 6.17 | |
| The outlook highlights solid earnings momentum and dependable dividend growth, with an improving valuation profile as earnings growth increasingly outpaces the rating. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view:
| Share Name and Position | BOX SA - Take Profit (Close the position) |
GLD SA - Buy (Continue to hold) |
OMU SA - Buy (Continue to hold) |
REM SA - Buy (Continue to hold) |
|---|---|---|---|---|
| Entry | 69.99 | 727.25 | 13.85 | 181.66 |
| Current Price | 79.64 | 713.00 | 13.59 | 194.67 |
| Movement | +13.8% | -2.0% | -1.9% | +7.2% |
| Comment | We suggest taking profit and closing the position. | Favourable AI forecasts and Elliott Wave alignment, with a potential Wave 5 extension, remain supportive. The share holds above its 200-day moving average, though downside momentum is a concern.<br/><br/> The profit target remains at R850.00, with a trailing stop-loss at R688.00. | The potential onset of Wave 5 within Elliott Wave theory remains supportive. The price continues to test the 200-day SMA, while fading downside momentum reinforces the trade idea.<br/><br/> The profit target remains at R16.30 with a trailing stop-loss at R13.15. | The potential onset of Wave 5 within Elliott Wave theory remains constructive, with price holding above its 200-day SMA. However, fading upside momentum introduces some caution to the trade.<br/><br/> The profit target remains at R204.00 with a trailing stop-loss at R190.00. |
| Time to exit | 4 May 2026 | 17 August 2026 | 29 June 2026 | 18 May 2026 |
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