BAT shares fall below RM40 as earnings decline

PETALING JAYA: British American Tobacco (M) Bhd’s (BAT) share price has fallen below the RM40 mark for the first time in the past 15 months, amid declining earnings and narrowing dividends.

As at the close of trading yesterday, the counter was down by 3.45% to RM39.20, with nearly 662,200 shares changing hands.

In fact, the last time its share price was lower than the current level was on Feb 13, 2012, when it hit RM39.06.

The cigarette manufacturer’s share price movement, which has largely been on a downtrend since early this year, seems to be affected by the decline in its financial performance in recent times.

In its third quarter ended Sept 30, BAT’s bottom line took a hit, plunging by 32.7% year-on-year (y-o-y) to RM143.2mil from RM212.6mil a year ago. Revenue for the quarter also declined 18.8% to RM757.3mil from RM932.1mil previously.

Cumulatively, for the first nine months of the year, the company recorded a slight decline of 7.3% y-o-y in net profit to RM401.5mil from RM433.0mil last year.

Dividend distribution-wise, the company’s total payout has narrowed by nearly 19% in the period.

According to Bloomberg figures, the dividend play’s yield stands at 5.18%, with a 12-month forecast yield of 6.66%.

CIMB Research expects BAT’s financials in the near term to be continuously impacted, on the account of a less profitable product mix and higher advertising and promotional expenses.