Mandiri Sekuritas downgraded cigarette maker PT Gudang Garam Tbk to ‘neutral’ from ‘buy’ with a target price of 51,000 rupiah on slower-than-expected stock-up inventory sales and less aggressive raw material purchases.
“Our channel check in the Gudang Garam distribution level unveils not much surprise in the volume sales trend during the fourth quarter of 2012. Relatively mild hike in excise tax in 2013 drove slower stock inventory sales that caused sales excitement during the quarter to subside,” Mandiri analyst Octavius Prakarsa said in a note on Thursday.
Further, despite falling tobacco and clove prices, the firm did not aggressively purchase raw materials during during the second half of 2012, he added.
Shares of Gudang Garam were up 0.6 percent at 50,450 rupiah. The broader index was up 0.19 percent.
1050(0350 GMT) (Reporting by Andjarsari Paramaditha, Editing by Sunil Nair)