Philip Morris International By Mainza Moono …a Qualitative Analysis

Summary Ticker: PM Price: $84.30 Market Capitalization: $ Billion Dividend: 4% Beta (variability): 0.91 Stock Exchange: NYSE Investment Decision: Buy

Introduction to PMI (2008) Was a subsidiary of Altria Group, Inc, now independent! Spinoff Philip Morris International, Inc. is a holding company. its subsidiaries manufacture and sell cigarettes and other tobacco products Markets OUTSIDE of the USA. World’s second largest tobacco company PMI is the leading international tobacco company With 7 of the world’s top 15 international brands

Introduction to PM PMI’s other leading international brands include: Merit Parliament Virginia Slims Chesterfield Philip Morris PMI operates 53 production facilities in 33 different countries PMI holds an estimated 16.3% share of the total international cigarette market outside of the United States or 28.8% market share excluding China and the United States.

The Tobacco Industry Tobacco farming is part of the economy in more than 30 countries including Argentina, Brazil, China, Greece, Italy, Malawi, Mozambique, Tanzania, Spain, Turkey and the United States. Commonly used tobacco types: Virginia (or 'flue-cured') – golden/yellow color Burley – dark colored Oriental - aromatic

The Tobacco Industry

Competition Altria Group Inc US BASED, over Fair Value estimate, owns Marlboro Imperial Tobacco Group PLC Small local brands, lacks a global megabrand, 50% rev from EU Lorillard Inc US BASED, 90% menthol – Gov hates this, undiversified British American Tobacco Global scale, HIGH P/E Ratio, near Fair Value, < Brands

SWOT

Strengths Cigarettes are known in economic circles as an inelastic product OR having a low price elasticity – Pricing Power. Wide Economic Moat: Strong and Diverse Portfolio Brand Loyalty Producing and selling ADDICTIVE goods New CEO, André Calantzopoulos Has served as PM’s COO, CEO, President before the 2008 spinoff Strong DIVIDEND growth Economies of Scale

Weaknesses Maturing Developing markets in Europe Lower demand Litigation - costly, inefficient, and often wasteful Individual cases Class actions

Opportunities Focusing on International/Emerging Markets Untapped Asian markets Philippines, Indonesia, India, Bangladesh, Vietnam, (and even China) Smokeless tobacco products Swedish snus. E-Cigarettes? NOT YET - low awareness and demand in the developing world.

Threats Fiscal Measures Taxation (Excise tax, Customs duties, VAT) Advertising and Packaging Bans Plain packaging Exchange rates Strengthening dollar E-Cigarettes? PMI’s Rivals, including Altria Group have market ready products (MarkTen)

Quasi Conclusion Like financial intermediaries, such as Banks, this firm is to BIG to fail… The financials are only going to reinforce my position… BUY

Fin