PM - Philip Morris International

[randomep]

Hi folks, wonder if anyone heard of Karelia of Greece and have comments.

 

I try to be absolutely objective in my decision making.  I am a long term PM holder but I don't see how it can beat Karelia. Karelia, as I recall has a lower PE than PM and it has no debt.

 

So you know anyone likes the economics of PM should jump at Karelia, no?

[The Falcon]

Just looking at KARE.AT , thanks for putting it on my radar :)  A lot of PM's value lays in its brand and pricing power, I don't know anything about Karelia but will dig in for a look! 

[ourkid8]

I highly doubt PM would be able to purchase Karelia as PM is the market leader in Greece with a 40%+ market share and growing. (It has beaten Karelia)  It will most likely run into anti-trust issues if it looks at acquiring anyone due to their market share in the country. 

 

What do you mean you don't see how it can beat Karelia? What segment of the market does Karelia compete in? (High, medium or low) 

 

Tks,

S 

 

Hi folks, wonder if anyone heard of Karelia of Greece and have comments.

 

I try to be absolutely objective in my decision making.  I am a long term PM holder but I don't see how it can beat Karelia. Karelia, as I recall has a lower PE than PM and it has no debt.

 

So you know anyone likes the economics of PM should jump at Karelia, no?

[randomep]

 

This is really eye opening on PM practices worldwide.

 

 

I am not going to comment on how I feel about tobacco companies for fear of being vilified by politically correct people. But I must say, I understand a little better PM's business strategies.

 

 

[ourkid8]

PMI and other tobacco companies are ONLY trying to protect their trademarks.  Every other multi-national company such as Coke, Pepsi, P&G etc. would do exactly the same thing if someone tries to steal it. 

 

PMI just like other tobacco currently abide by all laws of the country and if a country wanted to outlaw cigarettes they should ban it out right.  The problem is, countries are in fact partners and in bed with big tobacco as they enjoy the tax revenue yet at the same time want to look like they are enemies against them.  It is such a double standard. 

 

Tks,

S

 

 

This is really eye opening on PM practices worldwide.

 

 

I am not going to comment on how I feel about tobacco companies for fear of being vilified by politically correct people. But I must say, I understand a little better PM's business strategies.

[FCharlie]

 

If the government took away someone's house without compensation, "for the public good",  that someone would resort to litigation and no one would criticize them. Why then do tobacco companies get called out for litigating against a country that strips them of all of their intellectual property?

 

I also wonder where the statistics come from that claim smoking rates have declined as a result of the plain packaging laws.  My guess would be that smoking is not down as much as is claimed, and the difference is being filled by the black market.

 

 

 

PMI and other tobacco companies are ONLY trying to protect their trademarks.  Every other multi-national company such as Coke, Pepsi, P&G etc. would do exactly the same thing if someone tries to steal it. 

 

PMI just like other tobacco currently abide by all laws of the country and if a country wanted to outlaw cigarettes they should ban it out right.  The problem is, countries are in fact partners and in bed with big tobacco as they enjoy the tax revenue yet at the same time want to look like they are enemies against them.  It is such a double standard. 

 

Tks,

S

 

 

This is really eye opening on PM practices worldwide.

 

 

I am not going to comment on how I feel about tobacco companies for fear of being vilified by politically correct people. But I must say, I understand a little better PM's business strategies.

[ourkid8]

That's a very good point as illicit trade has increased dramatically thus reducing government of tax revenue and increasing criminal activity.  On top of that, individuals have traded down to lower end brands which continue to decrease government coffers of important tax revenue. 

 

Tobacco companies still have not seen dramatic cigarette declines in Australia and hopefully other countries learn from this foolish experiment and chose to educate their citizens and let them make a choice.  What's next, fizzy drinks? Oh yeah... that has started!

 

Thanks,

Shahed

 

 

If the government took away someone's house without compensation, "for the public good",  that someone would resort to litigation and no one would criticize them. Why then do tobacco companies get called out for litigating against a country that strips them of all of their intellectual property?

 

I also wonder where the statistics come from that claim smoking rates have declined as a result of the plain packaging laws.  My guess would be that smoking is not down as much as is claimed, and the difference is being filled by the black market.

 

 

 

PMI and other tobacco companies are ONLY trying to protect their trademarks.  Every other multi-national company such as Coke, Pepsi, P&G etc. would do exactly the same thing if someone tries to steal it. 

 

PMI just like other tobacco currently abide by all laws of the country and if a country wanted to outlaw cigarettes they should ban it out right.  The problem is, countries are in fact partners and in bed with big tobacco as they enjoy the tax revenue yet at the same time want to look like they are enemies against them.  It is such a double standard. 

 

Tks,

S

 

 

This is really eye opening on PM practices worldwide.

 

 

I am not going to comment on how I feel about tobacco companies for fear of being vilified by politically correct people. But I must say, I understand a little better PM's business strategies.

[ourkid8]

Philip Morris International Inc. Increases Dividend by 2% to an Annualized Rate of $4.08 per Share

 

http://finance.yahoo.com/news/philip-morris-international-inc-increases-014700298.html

[fareastwarriors]

Is it too late to get in tobacco trade? Are the valuations stretched for PM and other big tobacco companies?

[blainehodder]

Is it too late to get in tobacco trade? Are the valuations stretched for PM and other big tobacco companies?

 

Same question could have been asked each yr since IPO

[sleepydragon]

If u look at sbux and ko's PE, PM is cheap.

I dont smoke, but cigarate is likely going to last for a long time.

Maybe i will add some, but this stock never correct!

 

[wisborough]

PM is a massive carry trade - USD debt and Emerging Market Revenue .

[wisborough]

I even prefer RAI - paying similar multiples without the cyclical ( FX) and balance sheet risks and they own Newport which is one of the best positioned brands in the US.

[sleepydragon]

depend on your view of USD.

If usd weaken, it will be very good for PM.

Buffett has shorted USD before. Unless we fix our debt and improve our deficits, USD is going lower in the long term.

So i think PM is a nice hedge against all my other US stocks holding

[randomep]

That's a very good point as illicit trade has increased dramatically thus reducing government of tax revenue and increasing criminal activity.  On top of that, individuals have traded down to lower end brands which continue to decrease government coffers of important tax revenue. 

 

Tobacco companies still have not seen dramatic cigarette declines in Australia and hopefully other countries learn from this foolish experiment and chose to educate their citizens and let them make a choice.  What's next, fizzy drinks? Oh yeah... that has started!

 

Thanks,

Shahed

 

 

 

Don't forget bacon!!!

 

[randomep]

Is it too late to get in tobacco trade? Are the valuations stretched for PM and other big tobacco companies?

 

Well I've been touting Karelia Tobacco

 

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/athkare-karelia-tobacco/msg223464/#msg223464

[orthopa]

I still think tobacco is one of the best and easiest investments for an investor to make. Altrias track record shows this to be the case. While the strong USD has hurt PM recently I bet we see that super low oil prices have allowed significant up trading world wide. World wide there are more then 2billion smokers and growing everyday.

 

The RRP products PM is rolling out slowly over Europe and Asia maybe the ticket to allow more organic consumption of tobacco products instead of relying mostly on population growth and price increases.

 

PM is my largest holding and although the last 3 years have been tedious the div has provided a nice way to accumulate shares in the mean time.

 

Currency neutral the business continues to grow 10-15% a year. Eventually the currency issues will abate some. Management has been aggressive with price increases lately to help combat this some. Cigarette prices never go down so this will be additional gravy in a more normal environment.

 

As far as overvalued look at MO over the last 10 years, when was it overvalued? The company consistently delivers earnings, buys back shares and raises the div like clock work. The Bud deal will provide for a larger then normal div increase later this year too.

[Sharad]

One thing that appears to be overlooked in the general marketplace is how PM will benefit from the lifting of Iran sanctions. Although there is a negative stigma to Philip Morris cigarettes in Iran, Iran represents a huge marketplace of smokers, and legally selling Philip Morris branded cigarettes will reduce costs and improve profitability in the region for PM. Before sanctions were implemented, Marlboro was one of the most popular brands in the country.

 

In addition, the sanctions being lifted in Iran will create opportunities for PM's tobacco based vaccine products that they have been introducing over the last few years.

[ourkid8]

I do not think it will be that easy however PM's management will hopefully find a way via a European subsidiary. Here is an example from CNN money. We have to wait for the next earnings call... this could be huge! Don't get your hopes up about the vaccine business, let's start with cigarettes. What we have all been patiently waiting for is China to remove restrictions to PM selling Marlboros. That is a game changer.

 

http://www.npr.org/sections/thetwo-way/2016/01/16/463168647/u-n-nuclear-watchdog-confirms-iran-nuclear-deal-set-to-be-implemented

 

US multinational corporations: (using apple as an example)

 

"It can apply to Treasury for a waiver to ship iPads to Iran from the U.S., but its U.S. business can't service the device or open a store in Iran. Apple could also face penalties if the iPad landed in the wrong hands.

 

"However, a European subsidiary of Apple could operate in Iran after Implementation Day. It just couldn't talk to Apple HQ in California about the Iranian operations."

 

One thing that appears to be overlooked in the general marketplace is how PM will benefit from the lifting of Iran sanctions. Although there is a negative stigma to Philip Morris cigarettes in Iran, Iran represents a huge marketplace of smokers, and legally selling Philip Morris branded cigarettes will reduce costs and improve profitability in the region for PM. Before sanctions were implemented, Marlboro was one of the most popular brands in the country.

 

In addition, the sanctions being lifted in Iran will create opportunities for PM's tobacco based vaccine products that they have been introducing over the last few years.

[Sharad]

I do not think it will be that easy however PM's management will hopefully find a way via a European subsidiary. Here is an example from CNN money. We have to wait for the next earnings call... this could be huge! Don't get your hopes up about the vaccine business, let's start with cigarettes. What we have all been patiently waiting for is China to remove restrictions to PM selling Marlboros. That is a game changer.

 

http://www.npr.org/sections/thetwo-way/2016/01/16/463168647/u-n-nuclear-watchdog-confirms-iran-nuclear-deal-set-to-be-implemented

 

US multinational corporations: (using apple as an example)

 

"It can apply to Treasury for a waiver to ship iPads to Iran from the U.S., but its U.S. business can't service the device or open a store in Iran. Apple could also face penalties if the iPad landed in the wrong hands.

 

"However, a European subsidiary of Apple could operate in Iran after Implementation Day. It just couldn't talk to Apple HQ in California about the Iranian operations."

 

One thing that appears to be overlooked in the general marketplace is how PM will benefit from the lifting of Iran sanctions. Although there is a negative stigma to Philip Morris cigarettes in Iran, Iran represents a huge marketplace of smokers, and legally selling Philip Morris branded cigarettes will reduce costs and improve profitability in the region for PM. Before sanctions were implemented, Marlboro was one of the most popular brands in the country.

 

In addition, the sanctions being lifted in Iran will create opportunities for PM's tobacco based vaccine products that they have been introducing over the last few years.

 

I appreciate your comments, ourkid. I thought PM's headquarters were in Switzerland, although its executives' offices are in New York City? I live in Canada, and little to no withholding taxes are withheld on dividends received, whereas the U.S./Canada tax treaty requires a 15% withholding rate. In any event, I have read an article (http://blogs.wsj.com/source/2012/08/16/u-s-boosts-trade-to-iran-despite-sanctions/) that alluded to PM being allowed to sell cigarettes to Iran (back in 2012), but PM never executed on the agreement. I should have linked to the article on my previous post. I envision that PM didn't want to be the first or second company in the U.S. to renew trade with Iran.

 

With respect to China, my understanding is that Philip Morris has a joint venture in the country, or at the very least a joint marketing agreement to sell Marlboro labelled cigarettes in the country (http://www.pmi.com/marketpages/pages/market_en_cn.aspx). I'm not holding my breath for that to change, unless the Chinese economy goes below even the most pessimistic forecast, and they require a greater source of tobacco taxation.

 

I should say that I'm not holding out for the catalysts noted above. I'm long PM as a hedge to the ever-strengthening USD and for its great ROA (I like the ROA metric over ROE - to me it presents a better representation of management's ability to execute on its long term plans).

[fareastwarriors]

Against All Odds, the U.S. Tobacco Industry Is Rolling in Money

Profits are booming, despite government regulation, huge legal settlements and fewer smokers

 

 

https://www.wsj.com/articles/u-s-tobacco-industry-rebounds-from-its-near-death-experience-1492968698

[james22]

I didn't find a MO - Altria Group thread?

 

Anyone buying the dip today?

[valueyoda]

Sold some out of the money puts, expiring in October with a strike price of $58, when Altria was trading around $61. Actually hoped to sell more, if the price continued to languish, but has rebounded quite a bit.

[boilermaker75]

  The worse ones now IMO are the sugar dealers claiming that taking in insane amount of sugar is not somehow horrible for the obesity epidemic that's going to rock our healthcare costs for decades. 

 

Sugar inflames your blood vessels and nerves.  Besides being the cause of type 2 diabetes, sugar is a major risk factor for cardiovascular disease and dementia. Type 2 diabetes and dementia, US's most costly diseases, are largely preventable with the most important step being not to ingest sugar.

 

[Read the Footnotes]

I bought MO, PM, and BTI today.

 

It was nice to immediately pickup a 6% return on PM shares bought just a few hours ago. The dip in PM share price was pretty illogical. I can't figure out how they are exposed to today's FDA press release regarding domestic US nicotine levels given that their sales are 100% international.

 

MO, and BTI are also interesting. They have both traded down similar amounts, but BTI is significantly more international and therefore less exposed to uncertainty in the US market

 

The truth is as LC pointed out on the "What are you Buying" Thread, this only impacts previously unregulated products such as cigars and e-cigarettes.

 

"Importantly, the anticipated new enforcement policy will not affect any current requirements for cigarettes and smokeless tobacco, only the newly-regulated tobacco products such as cigars and e-cigarettes."

 

Finally, though the political cover of the press release is that this change will have positive health effects:

 

"The U.S. Food and Drug Administration today announced a new comprehensive plan for tobacco and nicotine regulation that will serve as a multi-year roadmap to better protect kids and significantly reduce tobacco-related disease and death." https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm568923.htm

 

The truth is that this change could actually increase e-cigarette consumption and therefore revenue. Ask yourself, do people usually drink larger volumes of wine or beer? If the nicotine content were to go from wine levels to beer levels, would people smoke more or fewer e-cigarettes?