3 Things To Know About British American Tobacco (Malaysia) Berhad

British American Tobacco (Malaysia) Berhad (KLSE:BAT) is the largest tobacco company in Malaysia. The company has more than 100 years of history operating in Malaysia.

STOCK INFORMATION

1
TICKER SYMBOL: KLSE:BAT
MARKET CAP: RM 13.5 Billion (Updated 09 March 2017)
MARKET PRICE / SHARE: RM 47.26 (Updated 09 March 2017)
SECTOR: Consumer
INDUSTRY: Tobacco

THE BUSINESS

British American Tobacco (Malaysia) Berhad is the largest tobacco company in Malaysia. The company sells cigarettes with brands such as Dunhill, Pall Mall, Peter Stuyvesant, Benson & Hedge and Kent.
The company is a listed-subsidiary of British American Tobacco PLC, listed on the London Stock Exchange.

KEY STATISTICS (FY2015) 

Net Revenue: RM 2.56 billion
Net Income: RM 910.10 million
Total Assets: RM 1.196 billion
Earnings per Share: RM 3.19
Dividend per Share: RM 2.70
Net Income Margin: 35.5%
ROE: 170.0%

KEY OPPORTUNITIES

1. Long Track Record
BAT Malaysia has a long operating in Malaysia. It also has a long track record of growth in the country over the past 30 years. The team at BAT Malaysia is strong at adapting to changing environment. This is highlighted in the recent sale of its manufacturing facilities in Malaysia to remain competitive in the market.
2. High Pricing Power
BAT Malaysia distributes products that have strong pricing power. The company has consistently been able to transfer the cost increase of its product to its customers. In fact, BAT Malaysia has shown growing gross margin compared to two decades ago.

KEY RISKS

1.Declining Tobacco Usage
Overall, Malaysia is seeing a slow decline in smokers in the country. The trend is expected to continue for the foreseeable future. This means that the addressable market for its products is in decline, and could result in lower demand.
2. Government Policies
Smoking has always been an activity strongly discouraged by the government. If the trends happening in more developed countries are signs of where the tobacco industry is heading in Malaysia, we could be seeing more and more restriction on how BAT Malaysia can distribute its products.

VALUATION

British American Tobacco (M) Berhad is trading at 18.7 times its earnings and offers a 4.8% dividend yield.

INVESTOR RELATIONS

Investor Relation Material:
Annual Report
Financial Information

Datuk Oh Chong Peng
Senior Independent Non-Executive Director

Contact Details
Telephone number: +60 (3)7956 6899/7491 7100
Fax: +60 (3)7491 3772
E-mail: ocpeng@bat.com
Postal Address: Virginia Park, Jalan Universiti, 46200 Petaling Jaya, Selangor Darul Ehsan Malaysia

TOP SHAREHOLDERS DIRECT INTEREST (31 Dec 2016)

1. British American Tobacco Holdings BV – 50.00%
2. Employees Provident Fund Board – 7.355 %
3. Mitsubishi UFJ Financial – 6.537%

FINANCIALS

Click here for its Income Statement

Click here for its Balance Sheet

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Stanley Lim, CFA

Stanley Lim has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. He has written close to 2000 articles online, on investment education and market analysis. He is the co-writer for the upcoming investment book: “Value Investing In Asia”, scheduled to be published late 2017. Stanley is currently the chief editor of Value Invest Asia.