BAT Falls RM1 as Reprieve Seems Unlikely

Source from:  The Edge Daily 09/15/2009

KUALA LUMPUR: BAT shares fell as much as RM1 in afternoon trade on Sept 14 after AmResearch said the tobacco industry was unlikely to get a reprieve from a hike in excise duty this year when the Budget 2010 proposals are tabled in Parliament on Oct 23. At 4.16pm, BAT was down RM1 to RM45 with 434,100 shares done. The FBM KLCI fell 1.96 points to 1,206.32. Turnover was 456.57 million shares valued at RM743 million. AmResearch said tobacco manufacturers would take this opportunity to nudge up margins by passing on higher costs to compensate for shrinking sales volume. "While we think the tobacco industry is flexible enough to adapt to changes, our main concern lies in the quantum of excise hike, as a significant increase of more than 16%, or 3 sen per stick would invariably lead to higher uptake of illicits and ELPCs (extremely low priced cigarettes)," it said. It maintained its Neutral stance on the tobacco sector. It maintained Hold on BAT with higher fair value of RM46.40 per share, as it rolled forward its valuation base year to FY10F. Enditem