By Xavier Kong
British American Tobacco (Malaysia) Bhd (BAT) saw its share price end the morning’s trading at RM55.14, down 76 sen, putting the stock at a three-year low. This follows the group’s recent price hike across the board for its offerings, which saw prices raised as high as RM18 per pack.
The last time BAT saw prices like this was in December 2012, when the share price hit RM53.20. UOB Kay Hian analyst Fong Kah Yan noted that the dip in share price is likely the response to the group’s price hike, which Stefano Clini, managing director of BAT, had said was due to an off-Budget excise duty hike of more than 40%.
“While the previous price hike had managed to compensate for the volume loss of the price hike, this particular price hike might be seen as too much for consumers, which would directly impact the total volume of the group,” said Fong, adding that the volume loss from the latest price hike could see BAT facing a volume loss of between 10% and 15%.
“Honestly, it would not surprise me if volume loss went as far as 20%,” Fong added.
The most recent price hike, which happened at the beginning of November 2015, saw BAT raising the price of its brands as follows: Shuang Xi was hiked to RM18 from a previous RM15, Lucky Strike to RM17.50 from RM14.30, Benson & Hedges, Kent, and Dunhill to RM17 from RM13.80, Peter Stuyvesant and Pall Mall to RM15.50 from RM12.30.
BAT did not immediately respond to KINIBIZ queries.
As at 3.20pm, BAT share price fell to RM55.08, down 82 sen.
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