Please select


For My Business

< R10m annual turnover

For My Business

> R10m annual turnover

Please select


For My Business

< R10m annual turnover

For My Business

> R10m annual turnover

Switch to FNB Business

Product shop

By Turnover

First Business Zero (R0 - R1 million p.a) Gold Business (R0 - R5 million p.a) Platinum Business (R5 million - R60 million p.a) Enterprise Business (R60 million - R150 million+ p.a)

Transact

Business Accounts Credit Cards Cash Solutions Merchant Services eWallet Pro Staffing Solutions ATM Solutions Ways to bank Fleet Services Guarantees

Savings and Investments

Save and Invest 3PIM (3rd Party Investment Manager)

Borrow

FNB Cash Advance Overdraft Loans Debtor Finance Leveraged Finance Private Equity Securities Based Lending Selective Invoice Discounting Asset Based Finance Alternative Energy Solutions Commercial Property Finance Fleet Services

Insure

Insurance

For my employees

Staffing Solutions Employee benefits

Forex + Trade

Foreign Exchange Imports and exports Structured Trade + Commodity Finance Business Global Account (CFC account)

Value Adds + Rewards

Connect my business the dti initiatives Enterprise and supplier development Business Hub eBucks Rewards for Business DocTrail™ CIPC Integration Channel Instant Accounting Solutions Instant Payroll Instant Cashflow Instant Invoicing SLOW 24/7 Business Desk FNB Business Fundaba nav» Marketplace Prepaid products Accounting integrations

Industry Expertise

Philanthropy Chinese Business Islamic Banking Agriculture Public Sector Education Healthcare Franchise Motor Dealership Tourism

Going Global

Global Commercial Banking

Financial Planning

Overview

Bank Better

KYC / FICA Debit order + recipient switching Electronic Alerts

Corporates + Public Sector

Corporate Public Sector

All savings + investment accounts


Cash deposits

Notice deposits Immediate access Access to a portion Fixed deposits

Share investing

Shares

Tax-free investing

Tax-free accounts

Funds/unit trusts

Ashburton specialised products

Invest abroad

Offshore products

I want to save for

Personal goals Child's education Emergencies Tax-free

Compare similar

Compare

Additional options

Show me all Help me chosse Find an advisor

Financial planning

Overview

Back

Trade Ideas

Local Trade Idea - British American Tobacco (BTI) - BUY

 

By Peet Serfontein & Mmamosa Khanye

We enter a long position with a target price of R1 060.00 and a stop-loss of R827.00.

British American Tobacco is one of the world's leading tobacco groups, with brands sold in more than 180 markets. The combustibles portfolio includes Dunhill, Kent, and Lucky Strike.

Headquartered in London, United Kingdom, BTI is transforming into a broader, multi-category nicotine business offering a consumer-centric brand portfolio that contains smokeless product brands Vuse, glo, and Velo. This forms part of the group's strategy centred on "Building a Smokeless World", with the ambition of becoming a predominantly smokeless business by 2035.

Technically, the price in a developing-top pattern makes the share an interesting candidate for a long position (see the diverging trendlines on the main chart) - the pattern is characterised by two diverging trendlines, with the share producing progressively higher swing highs and lower swing lows. This provides a tactical upside opportunity when the price trades near the lower boundary of the formation.

The price is also trading at the lower range of the De-trended Price Oscillator (DPO) indicator, supportive of the bullish underlying trend (see the insert). The indicator has fallen deeply below the zero line, showing that BTI is trading well below its underlying cyclical average and is approaching the lower end of its historical range. This suggests that the recent decline may be becoming extended with a confirmed bullish signal to come from improving price action, a rebound from the lower boundary of the broadening formation, and stronger momentum or volume indicators.

Fading downside momentum in the Moving Average Convergence Divergence (MACD) histogram supports the trade idea, with smaller negative bars signalling weakening selling pressure and improving momentum.

Share performance

Share information

Share CodeBTI
IndustryFood, Beverage & Tobacco
Market Capital (ZAR)1901.2 billion
One-Year Total Return5.32%
Return Year-to-Date-2.32%
Current Price (ZAR)881.10
52-Week High (ZAR)1 111.12
52-Week Low (ZAR)853.66
Financial Year EndDecember
The price remains just below its 200-day simple moving average (SMA) at ~R936.23, which has been acting as major resistance.

Consensus expectations (Bloomberg)

FY25FY26EFY27EFY28E
Headline Earnings per Share (GBP)3.413.623.874.17
Growth (%)6.177.087.75
Dividend Per Share (GBP)2.452.502.602.69
Growth (%)1.983.963.66
Forward PE (times)11.0510.329.58
Forward Dividend Yield (%)6.717.378.35
The company is set to deliver positive consistent earnings growth over the medium term with a robust pipeline of growth initiatives, particularly among the smokeless and reduced-risk product brands (Vuse, glo, and Velo).

Buy/sell rationale

Technical analysis:

    • On the lower panel, the recent increase in Bollinger bandwidth indicates expanding volatility, which could support a bullish move if accompanied by positive price action and improving momentum. However, as the indicator measures volatility rather than direction, further price and volume confirmation is required.
    • However, the gradual decline in the On-Balance Volume (OBV) indicator is a concern as it suggests continued selling pressure and limited buying conviction. The bullish outlook would strengthen if the OBV stabilises and turns higher, signalling renewed accumulation and stronger volume support.
    • Our recommended entry range is R865.00 to R890.00, or as close as possible to R877.50 - a drop below this range would indicate a substantial change in price dynamics, giving reason to negate the trade idea.
    • Our target price is R1 060.00, representing ~20.8% upside from current levels.
    • Our proposed time to exit is end-November 2026, but investors can adjust for a longer or shorter time horizon, depending on price behaviour.
    • A drop below R827.00, or -5.8% below current levels, would suggest weakening technicals, and a stop-loss is recommended at this level.
    • We expect moderate price fluctuations and suggest a medium at-risk allocation for this trade. Increase exposure for a break above R890.00.

Fundamental view:

    • BTI's portfolio spans five categories, with Combustibles accounting for roughly 80% of revenue and including brands such as Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans. The remaining revenue is generated across its New Categories and oral products, including Vuse vapour products, glo heated tobacco products, Velo modern oral nicotine pouches, and traditional oral tobacco products such as snus and snuff.
    • The new category portfolio continues to outperform expectations, with strong adoption of Vuse, glo, and Velo providing a meaningful long-term growth driver as the company transitions towards a smokeless future.
    • The company also remains highly cash generative, with strong and consistent cash flows supporting an attractive dividend yield.
    • In terms of recent half-year results, adjusted diluted earnings per share (EPS) grew 7.9% to 167.8 pence with revenue growth of 1.4% year-on-year (y/y) (+2.9% in constant currencies) to £12.2 billion. This was a resilient performance that exceeded market expectations on the bottom line.
    • In line revenue generation was driven by strength in all segments, with particularly strong commercial execution in core combustibles pricing and rapid expansion in Modern Oral. Traditional Oral was pressured by soft demand due to continued cross category substitution.
    • Strong cash generation was also supportive of the improvement in the liquidity position with the group well on its way to achieving a cash conversion target of 95% in FY26. The company also remains on track to meet FY26 guidance, though it now expects delivery towards the lower end of its medium-term ranges.
    • From a risk perspective, the company faces several challenges, including exposure to adverse currency movements, ongoing declines in traditional tobacco volumes, and regulatory risks such as stricter legislation, excise tax increases, and potential price competition that could pressure margins. The growth of illicit products in New Categories remains a concern amid a slow regulatory response, while the company continues to manage a relatively high debt burden and balance sheet pressure.

Update on previous trade ideas

Share Name and position EntryCurrent PriceMovementCommentTime to exit
LHC - Buy (Continue to hold)11.7611.63-1.1%Strong volume support and continued trading above the 200-day SMA remain encouraging. However, fading upside momentum presents a concern for the trade idea. We retain our R13.35 profit target, with a trailing stop loss at R11.35.9 November 2026
CLH - Buy (Continue to hold)4.504.43-1.6%Emerging price symmetry and improving momentum remain of interest. The price has crossed above its 200-day SMA, strengthening the bullish trade idea. We retain our R4.50 profit target, with a trailing stop-loss set at R4.25.11 January 2027
JSE - Buy (Continue to hold)156.17152.20-2.5%A favourable 12-month AI price forecast, sustained trading above the 200-day SMA and positive price momentum support the trade idea. We retain our R171.00 profit target, with a trailing stop-loss at R150.00. 1 December 2026
CML - Buy (Continue to hold)43.2142.11-2.5%The possible development of Elliott Wave 5 remains of interest. However, the price remains below its 200-day SMA, and fading upside momentum presents a concern. We retain our R49.80 target, with a trailing stop loss at R40.90.26 October 2026
SSW - Buy (Continue to hold)43.4941.55-4.5%The upside breakout from a falling-wedge pattern remains of interest. However, the price remains below its 200-day SMA, with fading upside momentum a concern. We retain our R56.80 target, with a trailing stop loss at R39.40.12 October 2026
MTN - Buy (Continue to hold)199.31183.77-7.8%The possible early development of Elliott Wave 5 remains of interest. However, the price is trading below its 200-day SMA, with sudden downside momentum presenting a concern. We retain our R240.00 target and a R183.00 trailing stop-loss.23 November 2026

This trade idea can be action through FNB Local Trader by visiting shares.fnb.co.za.

How would you like to log in?