Maintain HOLD for dividends. MYR194.5m 1Q12 core net profit (+9% YoY, +14% QoQ) accounts for 25% and 26% of our and consensus forecasts respectively. Despite beaten-down ELPC market share and declining illicit cigarette consumption, the industry remains vulnerable to regulatory risks e.g. tax hikes and other legal sanctions. BAT's valuations have also overtaken its fundamentals; at 20x 2012 PER, it is trading at more than 1SD above its mean PER of 17x. We maintain our HOLD call with an unchanged DCF-based TP of RM50.40 for its decent dividend yield of 4.4% and defensive earnings.

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Source: Maybank Research - 24 April 2012