BATMF - British American Tobacco Malaysia: Structural Headwinds Persist
Elevator Pitch
I maintain a Bearish rating on Malaysia-listed cigarette manufacturer and distributor British American Tobacco Malaysia (OTC:BATMF) [ROTH:MK], or BAT Malaysia.
BAT Malaysia recovered strongly in 2Q 2020, as the company targeted the convenience store sales channel during the lock-down period, and resumed distribution activities quickly when lock-down measures were relaxed. However, BAT Malaysia continues to face structural headwinds, such as illegal cigarettes, consumer affordability, ineffective regulatory enforcement actions, and lower profitability with a shift to the value-for-money segment. As such, I retain my Bearish rating on BAT Malaysia.
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