Maybank IB reiterates 'hold' call on British American Tobacco

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KUALA LUMPUR (July 20): Maybank Investment Bank Bhd (Maybank IB) has reiterated a “hold” call on British American Tobacco (Malaysia) Bhd (BAT), as the company's 2018 second quarter results were within expectations.

"Taking the cue from the high illicit incidence, we understand that there has yet to be any meaningful step up in enforcement efforts. The industry’s recovery hinges much on concerted enforcement efforts by multiple government agencies," it said in a note today.

"While we understand that Pakatan Harapan’s 14th General Election manifesto on better enforcement efforts could benefit BAT in the medium to long term, we await further clarity or guidance on timeline/action plans,” Maybank IB said, adding that it had set a RM31.75 target price (TP) for BAT shares.

Meanwhile, Kenanga Research maintained a 'market perform' call on BAT shares with a lower TP of RM34.10 from RM35.15.

"The group may benefit from better margins in 2018 third quarter but possibly at the expense of a Sales and Services Tax-based price increase in September 2018 which could further expand the illicit market share," said the research firm.

At 10 am, BAT’s stock was eight sen higher at RM33.76 with 27,100 shares changing hands.