KUALA LUMPUR (Oct 24): CIMB IB Research has maintained its “Hold” rating on British American Tobacco (M) Bhd (BAT) at RM42.60 with a lower target price (TP) of RM40.90 (from RM45.90) and said BAT’s 9M17 core net profit was below expectations, at 68% of house and 66% of consensus full-year estimates.

In a note Oct 23, the research house said BAT’s 3QFY17 revenue and core net profit declined quarter-on-quarter by 2.2% and 2.7%, respectively, due to lower sales volume, higher operating costs and a less profitable product mix.

It said the lower sales volume is partly attributed to the launch of new value-for-money (VFM) segment products by JTI in 3Q17.

“BAT launched its own VFM product on 9 Oct 17, and we view this positively given its better affordability as VFM is the fastest-growing segment in Malaysia.

“Maintain our Hold call; our DDM-based TP is lowered to RM40.90,” it said.