British American Tobacco PLC (BAT) reported higher-than-expected robust y-o-y growth on a constant currency basis. All of BAT’s regions, particularly Asia Pacific as well as Africa reported increases in terms of higher price realisations offsetting overall flattish performance in volumes. Although we believe that in Europe and other developed nations the slower pace of economic recovery will remain a bottleneck for volume growth, economic growth in Asia-pacific and Africa…

Despite the company's expectation of volume pressure in 2010, we expect BAT to continue to perform robustly considering its balanced brand portfolio, the high proportion of revenues it derives from fast growing emerging markets and expected cost savings, which will support margin expansion. Furthermore, FY 2009 revenues will be supported by increased revenue contribution from the Africa and Middle East region, and also the Asia-Pacific region…

On 17 June 2009, British American Tobacco (BAT) announced its plan to acquire an 85% stake in PT Bentoel Internasional Investama (Bentoel), Indonesia's cigarette manufacturing company for US$580 mn. This acquisition is expected to drive BAT's revenues, going forward, given the large untapped market in Indonesia and, hence, we do not anticipate a change in our current BUY rating for the common stock....