Mixed signals for BAT in FY23, says Kenanga

KUALA LUMPUR: As inflation takes a bite out of consumer spending, smokers are switching out their regular tobacco for cheaper brands, which could potentially eat into the margins of manufacturers like British American Tobacco (M) Bhd (BAT).

Kenanga Research, which expects BAT's sales volume to sustain going into FY23, said it remains cautious over the downtrading trend in the market, which could see consumers move away from the company's higher-margin segments or make a complete shift to black market cigarettes.