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Cigarette trader Carreras targets 10 for one stock split

Published:Thursday | August 10, 2017 | 12:00 AM

Carreras Limited will ask shareholders to vote for a 10 for one stock split at the upcoming annual general meeting on September 6.

The cigarette distributor’s board approved the split of issued shares from 485.44 million to more than 4.85 billion units on Tuesday, but needs the decision ratified by shareholders.

If approved, the split will take effect September 20.

Carreras shares currently trade at $104, valuing the large cap stock at more than $50 billion on the market. The company is ultimately owned 50.4 per cent by British American Tobacco Plc.

Mark Croskery, CEO of Stocks & Securities Limited, said the split is welcome news as the stock is in danger of becoming illiquid.

He said Carreras earnings has improved substantially, which make its current price fairly valued.

“So essentially we agree with a stock split stance as persons will perceive the stock as illiquid or overpriced even though the dividend yield is attractive as compared to interest rates as the stock has hit or approached triple digits,” said Croskery.

Carreras last reported profit of $3.8 billion or earnings per share of $7.84 at year ending March 2017. The previous year produced profit of $3 billion or $6.20 earnings per share.

The company paid out dividends of $3.44 billion in FY 2017, and $4.23 billion the previous year in which a portion of the payouts were two special distributions.