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British American Tobacco (Malaysia) Berhad provides day-to-day management and administrative services to its subsidiaries, which are principally engaged in the manufacture, importation and sale of cigarettes, pipe tobaccos and cigars. The Company distributes its products within Malaysia under a portfolio of different brands, including Lucky Strike, Kent, Dunhill and Pall Mall. As of December 31, 2010, the Company had nine subsidiaries, six operating, namely Commercial Importers and Distributors Sdn. Bhd., Commercial Marketers and Distributors Sdn. Bhd., Rothmans Brands Sdn. Bhd., The Leaf Tobacco Development Corporation of Malaya Sdn. Bhd., Tobacco Importers and Manufacturers Sdn. Bhd., and Commercial Marketers and Distributors Sdn. Bhd.; and three dormant, namely Contemporary Force Sdn. Bhd., Lucky Strike Originals Sdn. Bhd., and Tobacco Blenders and Manufacturers Sdn. Bhd.
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not high yielding any more plus its bad for health.
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(28-06-2011, 02:48 PM)Drizzt Wrote: not high yielding any more plus its bad for health.
Yeah, shareholders may also have to worry about new anti smoking campaign, which will reduce the earnings...
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Aside from health situations, as with many sin stocks, a few campaign here and there will not deter people from smoking, drinking, betting. From my observation, there are MORE People smoking, drinking and betting now more than ever. What is eating into earnings of these companies are not duties and campaigns but contraband (illegal imports). That is one area that is bleeding their earnings. For me, if they can control or eliminate that area, earnings will soar, campaign or no campaign.
It may not be high yielding any more but if you saw some of these sin stocks long ago, you would have bought in, after perusing their income statement and balance sheet. As with any value stocks, you'd look at it when nobody wants to give it a second look, etc. As when JTI was RM3.30 and when GAB was RM3.80 and so on....
Disclosure: Have holdings in both JTI and GAB.
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I thought smuggling only bad for governments because governments can't collect tax. What does it have to do with the manufacturer of cigarette?
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Contraband will sell at a lower price compared to products sold via normal distribution. There are hard liquor that sells for 1/3 the market price and cigarettes as well. It is not only disadvantageous for the government (loss in terms of duties) but also for manufacturers (loss of income). So if for a majority of smokers who doesn't care where they get the smokes but as long as the price is right (cheap), who loses out? Will they buy contraband or the legal (BAT, JTI) stuff? And if they don't buy the legal smokes, that spells --- lost sales = lost earnings.
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24-07-2011, 11:42 PM
(This post was last modified: 24-07-2011, 11:45 PM by freedom.)
but the contraband stuff is still made by the same manufacturers at the same cost. Will the manufacturers sell their product to illegal channels for a cheaper price than legal channels? of course the retail price is different, but that should have almost nothing to do with the manufacturers, right?
the legal channel retail price is high because of governments' heavy duties.
On the other hand, because of cheap contraband, there will be more people smoking. otherwise, governments no need heavy duties.
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(24-07-2011, 11:42 PM)freedom Wrote: but the contraband stuff is still made by the same manufacturers at the same cost. Will the manufacturers sell their product to illegal channels for a cheaper price than legal channels? of course the retail price is different, but that should have almost nothing to do with the manufacturers, right?
the legal channel retail price is high because of governments' heavy duties.
On the other hand, because of cheap contraband, there will be more people smoking. otherwise, governments no need heavy duties.
Contraband are usually imported from neighbouring states, which may or may not (most likely not) made by the manufacturer's local factory, which in turn will not be reflected in their sales figures.
One thing is for sure, there are more vice. LOL. Do you believe that because of the casinos, etc in Singapore, even with the levy for locals, the gamblers won't go???
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(25-07-2011, 08:49 AM)Hedgehog Wrote: (24-07-2011, 11:42 PM)freedom Wrote: but the contraband stuff is still made by the same manufacturers at the same cost. Will the manufacturers sell their product to illegal channels for a cheaper price than legal channels? of course the retail price is different, but that should have almost nothing to do with the manufacturers, right?
the legal channel retail price is high because of governments' heavy duties.
On the other hand, because of cheap contraband, there will be more people smoking. otherwise, governments no need heavy duties.
Contraband are usually imported from neighbouring states, which may or may not (most likely not) made by the manufacturer's local factory, which in turn will not be reflected in their sales figures.
One thing is for sure, there are more vice. LOL. Do you believe that because of the casinos, etc in Singapore, even with the levy for locals, the gamblers won't go???
imported from neighbouring states, still under the same group of companies. so the sale should be fine, I believe. overall the revenue should be larger rather than smaller for the whole British American Tobacco, of course not necessary for particular British American Tobacco, like (Malaysia only)
at least fewer people will go. People like me will not try if there is levy. But if there isn't, I am sure I am going at lease once in my lifetime.
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