[Intl-tobacco] Indonesia to raise cigarette prices by upto 10 pct this month - Vickers Ballas (fwd)

[Robert Weissman]

Indonesia to raise cigarette prices by upto 10 pct this month -
Vickers Ballas
Source: Hoover's, 2001-11-02JAKARTA (AFX-ASIA) - 

The government is likely to increase the minimum retail price of
hand-rolled and machine-rolled cigarettes by 10 pct and 5 pct respectively
this month, Vickers Ballas said.

This follows four previous increases this year in the banderole prices of
cigarettes, which led to a decline in sales volumes across the sector as a
whole by 5.8 pct in the nine months to September, the brokerage said in a
research note.

However, revenues of the major producers -- PT Gudang Garam, PT Hanjaya
Mandala Sampoerna and PT Djarum -- have largely been unscathed as the
price rises offset the volume drop, it said.

The minimum retail price of hand-rolled kretek cigarettes has risen by 27
pct this year, and machine-rolled cigarettes by 16 pct, it said.

"This has caused demand to soften, with revenue growth underpinned by
price increases, which has also helped producers to offset the significant
rise in the clove price over the year," Vickers said.

It said it recommends investment in Sampoerna shares rather than Gudang
Garam in the current environment, as the latter's sales are suffering from
the absence of a light product in its brand portfolio.

Gudang Guram's stick sales fell 6 pct year-on-year in the nine months to
September, while Sampoerna's sales volume rose by 11.7 pct, it said.

"Sampoerna's outstanding performance was supported by an 18 pct
year-on-year growth in light kretek brand A-Mild, which accounted for
about 33 pct of volume sold," Vickers said.

It said both Sampoerna and Gudang Garam's nine-month sales figures were in
line with expectations, accounting for 75 pct and 72 pct of full year
forecasts respectively.

The 2002 state budget targets 21.5 trln rupiah in revenue from excise duty
on cigarettes.

At 2.35 pm, Sampoerna was down 75 at 3,000 rupiah on 2 mln shares, while
Gudang Garam was down 200 at 8,900 on 2.5 mln shares.

The composite index was down 3.872 points at 378.127.

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