KUALA LUMPUR: British American Tobacco (Malaysia) Bhd's (BAT) outlook has become uncertain with a delay in the launch of its vape products and erosion of market share for traditional cigarettes, according to Hong Leong Investment Bank (HLIB) Research.
It maintained its hold call on the company's shares with a 15 per cent cut to its target price to RM9.22. It also trimmed its FY23f/24f/25f core profit after tax by -21 per cent/-18.1 per cent/-15.4 per cent to account for the lower-than-expected sales volume.
BAT reported 1H23 core profit after tax of RM89.5 million (-32.1 per cent yar-on-year), which again fell short of expectations, representing only 35 per cent of its full-year forecast.
The research firm in a note today said it maintains its view that BAT will not launch its vape products until the tobacco control bill makes its passage through parliament.
The tobacco control bill is slotted for debate in the next parliamentary session in October 2023.
"This delay in launching their vape products could have a negative impact on BAT, especially since there are currently no regulation governing the sale of nicotine vape products, making vape accessible to anyone, including minors under the age of 18. The increasing availability of e-cigarette products is expected to gradually erode the market share of traditional cigarettes, which will in turn affect BAT's sales," HLIB Research said.