PETALING JAYA: Prices of some consumer products could likely rise next year although not too drastic upon the expiry of the price guidelines of the Price Control and Anti-Profiteering Act 2011 by the end of this month.
Affin Hwang Capital, which is maintaining a neutral stance on the consumer sector, on Wednesday said it believe there would be price increases upon the expiry of the guidelines but are unlikely to be too drastic as some of the companies under its coverage have already increased prices throughout this year.
“Following the expiry, companies can increase prices of their products more flexibly, however, it may be at the expense of sales volume in an environment of weak sentiment as seen through companies such as British American Tobacco (M) Bhd (BAT) where a price increase has led to a large volume decline.
“We understand that companies are still allowed some price increases with justifications to maintain margins and pass on higher cost of goods and operating costs. For BAT, assuming a 1% increase in average selling price (ASP) with other variables kept constant, we estimate BAT’s financial year (FY) 2017-2018 net profit would increase by 2.7-2.8% year-on-year (y-o-y).
Affin Hwang Capital, which is maintaining a neutral stance on the consumer sector, on Wednesday said it believe there would be price increases upon the expiry of the guidelines but are unlikely to be too drastic as some of the companies under its coverage have already increased prices throughout this year.
“Following the expiry, companies can increase prices of their products more flexibly, however, it may be at the expense of sales volume in an environment of weak sentiment as seen through companies such as British American Tobacco (M) Bhd (BAT) where a price increase has led to a large volume decline.
“We understand that companies are still allowed some price increases with justifications to maintain margins and pass on higher cost of goods and operating costs. For BAT, assuming a 1% increase in average selling price (ASP) with other variables kept constant, we estimate BAT’s financial year (FY) 2017-2018 net profit would increase by 2.7-2.8% year-on-year (y-o-y).
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