FIRST ASIA SECURITIES
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DATA AS OF 20 JUN 2026 · EOD

CTC

Ceylon Tobacco
CONSUMER

LAST · LKR

1,821.11
−14.32 ▼ −0.78%
P/E 11.7× · YIELD 8.5% · ROE 232.5%

52W RANGE

1,725.302,308.12
16% OF RANGE · YTD −9.9%
01 / CTC — 1 YearAS OF 20 JUN 2026 · EOD
PERIOD 1Y · 250 SESSIONS▼
The Call
BUY+13%
2,050.00LKR · 12-MO
12.5× FY26E

Volumes stabilise; the yield carries the return.

Risks to our view
02 /

FAS DESK · FIRST ASIA SECURITIES RESEARCH · 23 JUN 2026 · EOD

A cash machine paying 8.5%

  1. 01

    Buy, LKR 2,050 target: Ceylon Tobacco is the market's purest cash compounder — an enormous ROE, near-full payout and an 8.5% yield — at a defensive 11.7×.

  2. 02

    Pricing power and an inelastic product deliver resilient cash flows through the cycle.

  3. 03

    The recovery in real incomes supports legal-volume stabilisation after the crisis-era squeeze.

  4. 04

    At ~12.5× FY26E our LKR 2,050 target plus the 8.5% yield is a high-teens total return from a defensive.

Where we differ from the street
Street viewOur viewWe change our mind if
Tax hikes and illicit trade erode volumes.Real and the main risk, but pricing power and the yield compensate; CTC has navigated it for decades.A punitive excise hike or a surge in illicit trade.
Down-trading and illicit cigarettes shrink the legal market.Recovering real incomes support stabilisation off a low base.Continued double-digit legal-volume decline.
Near-full payout leaves no cushion.The asset-light, cash-generative model funds it comfortably.A volume collapse that cuts cash flow.

— FIRST ASIA SECURITIES RESEARCH · NOT INVESTMENT ADVICE