KUALA LUMPUR (April 29): AllianceDBS Research has maintained its “Hold” rating on British American Tobacco (M) Bhd (BAT) at RM65.94 with a lower target price of RM65.15 (from RM69.94) and said the company’s 1Q15 earnings were boosted by purchases ahead of GST implementation.

In a note today, Alliance IB vice president for equity Cheah King Yoong said despite pre-GST stockpiling, BAT’s sales volume dropped 0.4% year-on-year, indicating a challenging environment

“In fact, BAT’s recent announcement to revise prices of all its

cigarette packs back to pre-April levels effective from April 17, after hiking prices by 50 sen/20-stick pack for all its cigarette brands along with the GST rollout on 1 April 2015, is a reflection of the challenging operating environment.

“We also acknowledge that the group’s market share has declined by 0.1% to 61.1% in 1Q15, compared with 61.2% in 2014.

“We have trimmed our FY15-17F earnings by 4-5% to account for (1) expected weaker earnings in the coming quarters after pre-GST stockpiling in 1Q15, and, (2) higher marketing and distribution cost,” said Cheah.

At 9.35am, BAT rose 0.12% or 8 sen to RM66.02 with 300 shares done.