Peet Serfontein & Motheo Tlhagale
We initiate a long position. Our upside target is set at R1 042. We recommend a stop-loss at R895.
British American Tobacco is one of the world's largest tobacco companies, with products sold in approximately 180 markets. Its combustible portfolio includes well-known brands such as Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans. In South Africa, the company has historically been the country's leading tobacco manufacturer and distributor, sourcing much of its tobacco locally and supporting farmers and agricultural employment. However, the company has announced plans to close its sole local cigarette manufacturing facility in Heidelberg by the end of 2026, citing severe competition from the illicit tobacco market, which has significantly reduced legal sales volumes.
BTI is regarded as a defensive stock thanks to its strong brands, global scale, and pricing power. The business generates substantial cash flow, enabling consistent shareholder returns and an attractive dividend yield.
Technically, a developing bullish pennant makes the share an interesting candidate for a long position (see the insert on the main chart). This pattern signals constructive continuation within the prevailing uptrend. It shows controlled consolidation as the price compresses after a strong advance. The structure forming above the 200 day moving average reinforces that the broader trend remains intact and selling pressure is being absorbed. Higher lows within the pennant point to increasing buyer demand. A breakout above the upper boundary would confirm renewed upside momentum.
The Elliott Wave structure suggests that the share may be entering Wave 5, which typically marks a renewed impulsive advance after Wave 4 consolidation. Early Wave 5 phases often provide favourable risk and reward, supporting the view that the broader uptrend is reasserting itself with room for further gains.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R957.
| Share Information | |
|---|---|
| Share Code | BTI |
| Industry | Food, Beverage & Tobacco |
| Market Capital (ZAR) | 2 058.03 billion |
| One Year Total Return | 46.99% |
| Return Year-to-date | 0.41% |
| Current Price (ZAR) | 945.12 |
| 52 Week High (ZAR) | 1 042.94 |
| 52 Week Low (ZAR) | 687.38 |
| Financial Year End | December |
| The price action remains above its 200-day simple moving average (SMA), which has recently acted as major support and supports the bullish bias. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (ZAR) | 3.63 | 3.38 | 3.60 | 3.86 |
| Growth (%) | -6.68 | 6.50 | 7.16 | |
| Dividend Per Share (ZAR) | 2.40 | 2.45 | 2.51 | 2.59 |
| Growth (%) | 1.98 | 2.41 | 3.39 | |
| Forward PE (times) | 12.77 | 11.99 | 11.18 | |
| Forward Dividend Yield (%) | 5.67 | 5.81 | 6.01 | |
| While earnings growth is expected to contract in FY25, a solid and sustained recovery, pointing to improving conditions and growing momentum, is expected over the medium term. The dividend yield remains highly attractive. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view:
| Share Name and Position | QLT SA - Buy (Continue to hold) |
MTM SA - Buy (Continue to hold) |
SHP SA - Buy (Continue to hold) |
SLM SA - Buy (Continue to hold) |
|---|---|---|---|---|
| Entry | 41.94 | 36.80 | 271.74 | 94.83 |
| Current Price | 42.01 | 38.19 | 268.63 | 102.49 |
| Movement | +0.2% | +3.8% | -1.1% | +8.1% |
| Comment | The positive alignment of trend, momentum, and cycle indicators (market regime) remains supportive of the trade idea, with the share continuing to trade above its 200-day simple moving average. Fading downside price momentum further underpins the constructive outlook. We maintain the profit target at R46.20, with a trailing stop-loss at R39.85. | The stable pattern of rising troughs and recurring upward impulses remains of interest, with the share continuing to trade above its 200-day simple moving average. However, fading upside price momentum remains a concern. We maintain the profit target at R42.00, with a trailing stop-loss at R37.60. | The price action near the lower boundary of an upward-sloping linear regression channel remains of interest, despite the share continuing to trade below its 200-day simple moving average. Muted downside price momentum provides tentative support. We maintain the profit target at R307.00, with a trailing stop-loss at R268.00. | The share continues to trade above its 200-day simple moving average, with upside price momentum supporting the trade strategy. We maintain the profit target at R110.00, with a trailing stop-loss at R97.50 |
| Time to exit | 23 March 2026 | 22 June 2026 | 11 March 2026 | 24 February 2026 |
| Share Name and Position | VOD SA - Buy (Continue to hold) |
ANH SA - Buy (Continue to hold) |
NPN SA - Buy (Stop Loss) |
|
|---|---|---|---|---|
| Entry | 132.90 | 1 031.56 | 1 127.80 | |
| Current Price | 147.01 | 1 119.79 | 1 023.04 | |
| Movement | +10.6% | +8.6% | -9.3% | |
| Comment | A period of low volatility, which may signal market stability and underlying accumulation, remains of interest. The share continues to trade above its 200-day simple moving average, and upside price momentum supports the trade strategy. We maintain the profit target at R157.00, with a trailing stop-loss at R147.00. | Price action remains firmly contained within an upward-sloping linear regression channel and continues to test the 200-day simple moving average. Upside price momentum remains supportive. We maintain the profit target at R1 255.00, with a trailing stop-loss at R1 082.00. | The share triggered its stop-loss, resulting in the position being closed. | |
| Time to exit | 11 February 2026 | 17 February 2026 | 08 June 2026 |
FNB Stockbroking and Portfolio Management (Pty) Ltd, a subsidiary of FirstRand Bank Limited, an authorised Financial Services Provider and authorised user of the JSE limited (Reg no: 1996/011732/07). This Publication note is issued by FNB Stockbroking and Portfolio Management (Pty) Ltd for the information of clients only and should not be produced in whole or part without prior permission. Although FNB Stockbroking and Portfolio Management (Pty) Ltd is an Authorised Financial Services Provider, any opinions and/or analysis contained in this Publication are for informational purposes only and should not be considered advice, including but not limited to financial, legal or tax advice, or a recommendation to invest in any security or to adopt any investment strategy. The information contained herein has been obtained from sources/persons which we believe to be reliable but is not guaranteed for correctness, completeness or otherwise and we do not assume liability for loss arising from errors in the information or that may be suffered from using or relying on the information contained herein irrespective of whether there has been any negligence by us, our affiliates or any other employees of us, and whether such losses be direct or consequential. As market and economic conditions are subject to rapid change, any comments, opinions, and analysis is rendered as of the date of publishing and may change without notice. Such changes may have a material impact on the outcome of any investment. Securities involve a degree of risk and are volatile instruments. Past performance is not indicative of future performances. Securities or financial instruments mentioned in the Publication note may not be suitable for all investors and FNB Stockbroking and Portfolio Management (Pty) Ltd has bares no responsibility whatsoever arising from or as a consequence hereof. The material is not intended as a complete analysis of every material fact regarding any share, instrument, sector, region, market, country, investment, or strategy. The recipient of this Publication must make their own investment decision and is advised to contact his relationship manager for a personal financial analysis prior to making any investment decisions. Copyright 2018 by FNB Stockbroking and Portfolio Management (Pty) Ltd.
