BAT SHARES UNDERVALUED, SAY STOCK MARKET ANALYSTS
BAT Industries Plc <BTI.L> 1986 results,
which were at the upper end of market expectations, showed the
company was in a strong position and that its shares were
probably undervalued, share analysts said.
    BAT shares were down at 524p in late afternoon trading
after a previous 535p close. They touched a high of 538p
earlier on news of a 19 pct rise in annual profits to 1.39
billion pre-tax.
    Stock market analysts said today's generally weak stock
market plus unwinding of positions after heavy buying of BAT
shares in the run-up to the results caused the fall in the
share price.
    "In the current market, people almost expect companies to
beat expectations," said one analyst, adding that pretax profits
of 1.35 to 1.40 billion stg had been forecast.
    BAT's 1986 figure of 1.39 billion stg compared with a 1985
pretax profit of 1.17 billion.
    Brokers noted that BAT's shift away from its
underperforming industries and the decreasing share of the
tobacco portion of the group were seen as good signs.
    BAT Chairman Patrick Sheehy told a news conference that the
tobacco sector of the company had declined to 50 pct from 74
pct four years ago.
    Sheehy said he could see the tobacco portion of the company
declining further as other sectors increased in importance.
    He said BAT was looking to expand in the area of financial
services, in particular in the U.S.
    Sheehy also said the group had "no sizeable acquisitions" in
sight in the near future.
    Analysts said BAT's increasingly good performance in the
U.K. Insurance area was encouraging.
    Its declining debt-to-equity ratio of currently about 16
pct also made it likely that BAT would soon be looking to make
major acquisitions, they said.
 Reuter
