British American Tobacco p.l.c

Analyst thesis

Our recommendation is based on:

• Brand equity positions British American Tobacco (BTI) as one of the leading players in the tobacco industry.

• The launch of next-generation smokeless products alleviates long-term concerns over cigarette volume declines.

• The US (~45% of revenue) illicit vape crackdown through stricter regulation, has assisted in the growth of new generation products and restored revenue growth in the region.

• The dividend yield continues to be an attractive characteristic for an already strong defensive rand-hedge within its sector.

• Valuation levels from a P:E basis are slightly above the long-term history.