Hot Stock BAT rises as high as 1.7% after introducing Kretek cigarette

Hot Stock BAT rises as high as 1.7% after introducing Kretek cigarette
Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Monday, 09 September 2013 11:27

KUALA LUMPUR (Sept 9): BRITISH AMERICAN TOBACCO (M) [] Bhd (BAT) saw its share price rising as high as 1.7% in early trades after it launched Dunhill Kretek more than a week ago.

At 11.14 am today, BAT was trading at RM62.28, which was higher by 82 sen or 1.3%, with 61,700 shares exchanging hands.

The second top gainer hit a high RM62.50 or 1.7% in earlier trades.

In a note today, Hong Leong Investment Bank Research said the new line came as a surprise as it did not expect the legal tobacco player would manufacture kreteks, and BAT is the first in the industry to do so.

Hong Leong IB research analyst Grace Chew said she gave a neutral view on Kretek as the product’s contribution to the group is marginal since the majority of the legal cigarette smokers smoke whites.

“We maintain ‘hold’ call with unchanged target price of RM59.86 on BAT stocks, based on discounted cash flow valuations,” said Chew.

Meanwhile, Chew added that the legal Kretek products would not pose a significant impact towards reducing illicit kretek.

“Illicit products are still the major concern despite the declines for the past two years. The decline was largely due to the drop in illicit kreteks, offsetting the increase in illicit whites,” she said.