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CONSUMER STAPLES: Phillip Morris (PM; A2/ A-/A Neg) 3Q Results (#2)

CONSUMER STAPLES

Equities closed +10%, leaving it +37% YTD - on a 1yr forward P/E it now trades above 20x - an achievement in Tobacco where most peers (ex. JAPTOB) trade in the single digits.

  • It not only reflects history but its superior position heading forward. Investments in non-combustibles are continuing to benefit it - it's 2022 purchase of Sweedish Match for $16b was the driver of analyst praise yesterday as nicotine pouch brand Zyn clocked over 40%yoy volume growth in the US.
  • As we said heated tobacco unit line IQOS is also seeing double digit growth + market share gains -the brand is one of its own innovations.

It is something to keep in mind when it comes to peers; Altria is ~2/3 the size of PM, has only ~15% exposure to non-combustibles, yet pays out more than PM to equity holders ($7.8b last year) - allowing PM to out-invest it consistently (capex + acquisitions).

Numbers from yesterday here

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Equities closed +10%, leaving it +37% YTD - on a 1yr forward P/E it now trades above 20x - an achievement in Tobacco where most peers (ex. JAPTOB) trade in the single digits.

  • It not only reflects history but its superior position heading forward. Investments in non-combustibles are continuing to benefit it - it's 2022 purchase of Sweedish Match for $16b was the driver of analyst praise yesterday as nicotine pouch brand Zyn clocked over 40%yoy volume growth in the US.
  • As we said heated tobacco unit line IQOS is also seeing double digit growth + market share gains -the brand is one of its own innovations.

It is something to keep in mind when it comes to peers; Altria is ~2/3 the size of PM, has only ~15% exposure to non-combustibles, yet pays out more than PM to equity holders ($7.8b last year) - allowing PM to out-invest it consistently (capex + acquisitions).

Numbers from yesterday here