Troubled by The Rumor of 50.000 IDR/Pack, The Tobacco’s Share Price Does Not Budged

• The movement of tobacco’s share price is fair, although the rumor of 50.000 IDR/ pack is incriminating
• Profit grows, especially GGRM and HMSP
• HOLD: GGRM

The rumor of 50.000 IDR did not Affect Decreasing the Tobacco’s Share Price

On August, the tobacco companies are troubled by the rumor from government that will set the cheapest tobacco price of 50.000 IDR per pack. But, the tobacco’s share price had only move slightly below the consumer index. Even HM Sampoerna Tbk (HSMP) still remains above the index. Maybe it is because the markets have not yet believed that it will happen soon. Or the market believes that the rising price will not decrease the cigarette needs.

The Tobacco Companies Recorded Good Performances

The share price does not budged is also probably because of their good performances. The average profit growth reached by 15,8%. This is supported by 12% of the rising revenue. The investors get a yield by 9,2%. It is mainly for Gudang Garam Tbk (GGRM) and HMSP. While Bentoel Internasional Investama Tbk (RMBA) and Wismila Inti Makmur Tbk (WIIM) are still struggling to seize the market and raise their margins.

HOLD: GGRM

The average target price that is given by analysts for GGRM is 76.241 IDR or 17% above the current price which is 65.125 IDR. Some catalysts are the recovering of people’s purchasing power and good balance sheet.

Meanwhile, HMSP is recommended HOLD with an average target price of 4.110 IDR or 2% above the current price, which is 4.030 IDR. RMBA and WIIM have not got the coverage from the analyst.