There is uncertainty surrounding British American Tobacco (M) Bhd (BAT) as the launch of its vape products (VUSE) is delayed, potentially impacting its prospects. Hong Leong Investment Bank (HLIB) Research reported that the tobacco bill, which would allow for the entry of BAT's vape products into the market, will be postponed until the next parliamentary session in October. This delay hampers BAT's ability to gain significant market share, as there are already a wide range of vape products available. Furthermore, the increasing availability of e-cigarette products is expected to gradually erode the market share of traditional cigarettes, which could affect BAT's sales.
In a recent filing with Bursa Malaysia, BAT announced a core profit after tax of RM89.5 million in the first half of the year, falling below expectations. The lower sales volume, driven by the resurgence of the illicit market share and increased usage of vape products, contributed to this result. HLIB noted that although BAT's revenue increased by 6.4% year-on-year, the core profit after tax was 35.7% lower due to a higher tax rate and operating costs. The tax rate of 29.7% exceeded last year's rate of 29% during the Prosperity Tax period, mainly due to non-deductible expenses.
HLIB maintained a "hold" rating on BAT but reduced its core profit after tax projections for FY23-25, leading to a downgrade of its target price from RM10.86 to RM9.22.
In summary, BAT's entry into the vape market faces uncertainty due to a delayed tobacco bill, potentially impacting its prospects. The increased availability of e-cigarette products further poses a threat to traditional cigarette sales. As a result, BAT reported lower than expected profits in the first half of the year, with a decrease in sales volume and higher operating costs contributing to this outcome. HLIB maintained a "hold" rating on BAT but adjusted its core profit after tax projections and target price downward.
Disclaimer
This article is provided solely for professional research, industry discussion, and informational purposes. Any references to brands, companies, products, technologies, or policies are made for factual reporting and analytical purposes only, and do not constitute endorsement, recommendation, promotion, or advertising by 2Firsts.
Nicotine-containing products, including but not limited to cigarettes, e-cigarettes, heated tobacco products, and nicotine pouches, carry significant health risks. Readers are responsible for complying with all applicable laws and regulations in their respective jurisdictions, including age restrictions and access limitations.
The information contained in this article should not be regarded as investment, legal, medical, regulatory, or commercial advice. While 2Firsts strives to ensure the accuracy and reliability of its content, it does not assume liability for any direct or indirect loss arising from errors, omissions, inaccuracies, or reliance on the information contained herein.
This article is not intended for individuals below the legal age for accessing tobacco or nicotine-related information in their jurisdiction.
Copyright Notice
This article is either original content produced by 2Firsts or content reproduced, translated, summarized, or adapted from third-party sources with attribution where applicable. The intellectual property rights of the original content remain with 2Firsts or the respective original rights holders.
No individual or organization may copy, reproduce, distribute, republish, modify, translate, or otherwise use this content without prior authorization. Any unauthorized use may result in legal action.
For copyright-related inquiries, corrections, or removal requests, please contact: info@2firsts.com.
AI-Assisted Translation and Editing Notice
Portions of this article may have been translated, edited, or reviewed with the assistance of artificial intelligence tools to improve efficiency and readability. Due to the limitations of AI-assisted translation and editing, discrepancies, omissions, or inaccuracies may exist when compared with the original source.
Where applicable, readers are advised to refer to the original source for the most complete and accurate information. If you identify any errors or believe that any content infringes upon your rights, please contact us at info@2firsts.com, and we will review and address the matter promptly.
