Mastermind Tobacco will be the biggest beneficiary of the tax reduction on unfiltered cigarettes, according to London-based investment bank Exotix.
Exotix says in a research note that Mastermind will gain the most because of its dominance in the low-end market with filter-less brands such as Rocket.
Its rival BAT #ticker:BAT will benefit little since unfiltered cigarettes account for about 10 per cent of its sales. Filter-less cigarettes will be taxed at the rate of Sh1.8 per stick, from Sh2.5 per stick.
“BATK’s Rooster-branded cigarettes are unfiltered. These make up a relatively small proportion of its portfolio, roughly 10 per cent according to management,” said Exotix.
“While we do not know what proportion unfiltered cigarettes contribute to the portfolio of Mastermind Tobacco, we assume it’s greater. Therefore we think MTK stands to benefit more from this change.”