JTI''s Fair Value Unchanged at RM7.20

Source from:  Business Times 02/11/2014

AMESECURITIES has maintained a "hold" call on cigarette maker JT International Bhd (JTI) pending the release of its 2013 financial year results next week.

The company's fair value remains unchanged at RM7.20 a share.

Despite the shrinking total industry volume of legal cigarettes, AmeSecurities believes that JTI's stock will continue to be of interest to investors.

JTI claims that sales volume in the fourth quarter of its 2013 financial year had declined by 10 per cent due to the government-imposed excise duty hike in September 2013.

AmeSecurities said the presence of illicit cigarettes and extremely low-priced cigarettes have made duty-paid cigarettes more elastic.

However, it said JTI will be able to offset any loss through its Winston brand, which controls more than half of the market share.

To maintain its market share, JTI is focusing on product innovations with the launch of Mevius Airstream (previously known under Mild Seven brand).

The company has no plans to enter the e-cigarette market and claims that cheap illicit cigarettes are still favoured by some smokers over e-cigarettes locally. Enditem