KUALA LUMPUR (Oct 17): Kenanga Investment Bank Bhd upped its net profit forecast for British American Tobacco (M) Bhd (BAT) by up to 2.7% and raised the target price (TP) for the stock to RM65.70.
In a note today, Kenanga analyst Soong Wei Siang said the research firm raised its profit forecast for BAT by 2.7% and 1.7% for financial years ending December 31, 2014 and 2015 respectively. The new TP compares to RM64.50 previously.
"Outlook was slightly boosted by the recovery of legal volume as well as consolidation of market share. However, the industry volume is still not expected to see significant turnaround following the last price hike as well as the higher cost of living environment, which encourages downtrading to cheaper illegal cigarettes.
"All in all, we remained negative on BAT despite the decent financial performance, which was driven by selling price hike rather than the industry volume growth," Soong said.
Yesterday, BAT reported a higher net profit of RM241.1 million for 3QFY14 from a year earlier. Revenue rose to RM1.21 billion.