Stock to review: BAT (4162) Current share price as at 28/7/2020: RM10.66

Performance: Not good but picking up. 

Balance Sheet

I will just go straight to the point. Can you see the amount of inventories is RM216mil while the cash and bank balances is RM6.3mil? Borrowings of RM525mil? BAT is in trouble. Inventories increased at an alarming rate while the cash decreased so much, just for the sake of giving the shareholders dividends. If you have your retirement funds parked at this counter I hope you might want to exit this to prevent further losses. Yes BAT give you dividends, but ask yourself based on the facts is this sustainable? BAT's financial position is getting worse every quarter. If you have retirement funds here, better go and look back previous quarters result and you would know what I'm talking about. 

To illustrate let's put it this way. You have in your bank account RM6k, inventories in business worth RM216k, borrowings of RM525k. What do you think of your position if this is what you have currently? And you want to pay your shareholders dividend. Where do you want to get the cash for the dividends? Sell stocks? Yes. But if you sell not enough, then how?

The following link for their prospect have been going downhill since long time ago. I'm sure you know what's IQOS right? Philip Morris have been dominating in the Malaysian market for so long. From the information I gather from people from Philip Morris previously, BAT have unresolved issues with their product of similar nature.

https://www.freemalaysiatoday.com/category/nation/2020/07/30/consumer-advocates-call-for-tobacco-tax-reforms-as-illicit-sales-boom/

I rest my case.

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