British American Tobacco (BATSLN; Baa2 Pos, BBB+ S, BBB+ S) {BATS LN Equity}

Nothing new in BAT headlines from its AGM remarks. Worth noting it's aiming for 50% revenue from smokeless products by 2035 vs. PM targeting 67% by 2030 - stark difference on exposure into the high-growth segment might be reflective of the cost of BAT directing cash towards continuous deleveraging. We don't expect S&P to push it on A- on new leverage targets, Moody's upgrade (to Baa1) would be no surprise/priced. Liquidity premium on broader sell-offs remain X-factor; curve still at relative wides post 32s pricing.

• FY24 guidance unch at low single digit organic growth in revenue and EBIT. Operating cash conversion expected at 90%+. Does warn expected to be 2H skewed with capex higher in 1H & macro pressures & illicit single-use vapes in the US.
• Medium term guidance is for +3-5% organic revenue growth & mid-single digit adj EBIT growth.
• Reiterates buybacks started (was minimal - over next 2 years nets ITC sale proceeds/£1.6b) & deleveraging target towards 2-2.5x (current 2.6x).