First Quater - 2013 Performance
CTC's first quater 2013 profits declined 2% YoY to LKR1.5bn on the back of a drastic reduction in volumes (c.14% YoY) and a one-off reduction in other operating expenses in 2012. CTC's net revenue after taxes grew marginally by 3% YoY to LKR4.7bn solely on price revisions and higher margin Dunhill sales. The pending pictorial warnings on cigarette packs may further dampen volumes. In 2013E, expects CTC's earnings to marginally grow 4%YoY to LKR8.5bn (vs. our previous estimate of LKR9.6bn). CTC currently trades at a forward PER of 18x and at a 29% premium to CAL's fair value of LKR626. CAL maintains a SELL on CTC.