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GREATWARRANTS

Author: GreatWarrants   |   Latest post: Wed, 25 Mar 2020, 12:00 AM

 

BAT - BENEFICIARY IN POTENTIAL "CHANGE"

Author:   |    Publish date:


Dear Valued Affluent Investors,

As all Malaysians know, there is a certain level of political uncertainty going on throughout the weekend this week in our beloved Nation. Nevertheless, do take a look at how British American Tobacco is positioned in this current environment.

 

Analysis

The current government's aim to reduce smoking among Malaysians should be applauded. However, there are a few concerns which one may ponder upon - Such as the imposed methods of curbing cigarretes and the actions taken from a government as a forefront in curbing the Illicit cigarette trade.

 

These are some news in the past which have impacted the local tobacco industry in the past 2 years. These policies may not be too friendly for the industry

1) Severe Fines for Smoking In eateries.

 

 

 

2) IMPLICATION OF SST OF 10% IMPACTED

CIGGARETTE PRICES INSTEAD OF 6% GST

 

https://www.theedgemarkets.com/article/10-sales-tax-will-increase-cigarette-prices-all-bat-brands

 

Action Taken to curb Illegal Cigarettes 

 


OUTLOOK ON CHANGE


There is an Opportunity for the government to shine by curbing/ banning illegal industry & shadow economy. The previous government also had a softer and business friendly approach towards handling the concerns in the tobacco industry.

 

On the company side, this is also Opportunity for BAT to work together and enhance relationships with the government to combat illegal trade - which did not seem to work since 2018 which caused a severe decline in share price to RM 14 from a high of RM 50-60

DIVIDEND YIELD STRONG

EPF Only paid out 5.45% Dividend.


BAT is projected to pay approximately an annuallized dividend of RM 1.20 which is equivalent to 8%-12 % at this price range

EPF Should consider re-investing back in BAT to bring up its annual dividend payout of 5.45%

https://www.thestar.com.my/business/business-news/2016/02/04/epf-says-it-will-sell-bat-stake-at-right-price/

Epf sold its stake in BAT in 2016

Investment Portfolio 

Affluent investors should question investment yields such as property and bonds which yield only +-5% while BAT manages to payout such a strong dividend payout of approximately 8%-12 % at this price range.

 

Conservative Fair value for this company should range between RM 20- RM 40 in the long term.

Thanks for reading. 
Best Regards,
Greatwarrants

 

Disclaimer: 

Investing in stocks is a great tool for capital gains. However, all investments come with risk. Therefore, all investment decisions should be borne at your own cost and I will not be held liable for any investment decisions made. Do not buy Equities if you do not know the risk !! Thank you.

This is an unbiased and impartial report which does not take sides on any government. the Rakyat genuinely want the best for our beloved nation, Malaysia.

 

 

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Labels: BAT

Related Stocks

Chart Stock Name Last Change Volume 
BAT 10.44 +0.10 (0.97%) 1,029,200 

  3 people like this.
 
24/02/2020 6:35 AM
kathyyong govt seized only 12% in illicit cigarettes, and the rest managed to be smuggled and sold, causing huge economic loss and drops in shares..not too mention the imposition of high tax will only encourage people to buy more of the illicit cigarettes..
24/02/2020 10:50 AM
jaiishak This is why I don't invest in Malaysia.. there is very little/no enforcement. Government just simply taxes you like this but end up everyone buys johns for RM5..what are they even doing about the sale of illicit cigarettes?
24/02/2020 10:52 AM
CatchThe Bull Which warrant for BAT is the most recommended by author?
24/02/2020 4:36 PM
jimyeo not just the smoking ban, but also the sale of illicit ciggarettes at shops..ovt should really curb these illegal sales and give out proper penalty to those found in possession or supplying the illicit cigarettes..65% of last year's cigarette sales are contributed by the illicit ciggie trades..and they didnt even have to pay tax..
25/02/2020 3:57 PM
jofernandez the current govt not bothered to combat against illicit cigarettes perhaps..they just put smoking ban only..which adds to the loss of profit by BAT
26/02/2020 4:53 PM
williamh All these must be related to the custom,they surely has some bad sheep’s,,catch these black sheep you are halfway victories
31/03/2020 10:20 AM
williamh The mariners and border customs are to answering or sack the heads,try sack the head tomorrow it will be stopped
31/03/2020 10:22 AM


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