According to Maybank Investment Bank Research, the tobacco manufacturer guided in a results briefing that the vape product, called Vuse, will be priced similarly to its value-for-money and aspirational segments for cigarettes.
However, it is awaiting the release of the formalised regulatory framework before its launch following the Budget announcement on nicotine-based excise tax on vape juices and gels from Jan 1, 2022.
The vape market currently accounts for about 10% of industry volume share and BAT targets to be a market leader within three years.
Meanwhile, BAT's management has guided that the Prosperity Tax announced in Budget 2022 could potentially raise its FY22 tax expense by about RM20mil.
"Hence, imputing a higher effective tax rate of 31% (vs. 27% previously), we prudently lower our FY22 earnings estimates by 6%. a lo
"Our FY21 and FY23 earnings estimates are unchanged," said Maybank IB.
The brokerage maintained its "buy" call with an unchanged discounted cashflow target price of RM15.20.
According to BAT, positive volume growth year-to-date was mainly attributed to the clawback of legal volumes after firmer trans-shipment regulations were enforced on Jan 1, 2021.
This also led to a decline in illicit share to 57.9%.
Separately, the 3Q21 restructuring costs of RM2mil involved certain parts of its trading business which moved onto digital platforms.
The exercise is expected to be completed by 1H22.