Earnings Report /

BAT Bangladesh: 2019 – Both earnings and dividend beat our expectation

    IDLC Securities
    23 February 2020
    Published byIDLC Securities

    British American Tobacco Bangladesh (BATB) declared EPS of BDT51.4 for 2019, suggesting a c8% yoy decline in profit. However, it surpassed our annual EPS expectation of BDT50.2 by c2%.

    EPS stood at BDT15.4 in 4Q 2019 compared to BDT11.9 in 4Q 2018, suggesting c30% yoy earnings growth for the quarter. The 4Q 2019 results surpassed our expectation by c8%.

    Please note that the increase in the illicit cigarette market, due to the price hike in June 2018 budget, put pressure in BATB’s sales during 1H 2019. During 1H 2019, earnings declined by c35% yoy. The performance improved during 2H 2019 (c30% yoy earnings growth) driven by the launch of new brands (Royals of London), gaining market share from the competitors, and legal steps against illegal cigarette manufacturing with the help of the regulatory and law enforcement agency. The recovery in performance during 2H 2019 mostly offset the decline in 1H 2019.

    BATB declared a BDT40/share dividend (c78% payout) for 2019. The payout significantly outperformed our expectation of BDT20/share (c39% pay-out) and last six years’ median payout of c50%. 

    We will provide with more updates when the financials become available.