Philip Morris International Inc (PM)

[DeepDive]

Investment thesis.

Some people smoke (about a billion).

Young people smoke too (ie smoking is not going away).

Smoking is led by addiction (nicotine).

People seek addicting substances (see MJ)

Tobacco industry is immune from competition (regulatory establishes high cost to entry)

Yet this is a 465 million $ market per annum where the ROCE is above 40%!

This kind of a large demand is here to stay, like it on not.

RRPs are sexy, stylish and are growing. They make perfect sense: get your nicotine at reduced harm.

Gov will have to approve as part of effort to reduce harm of full burn tobacco product.

When they do- demand will explode: “it’s safe now”!

PM will be a turnaround case study in business school.

Right now you get to buy a super profitable business, cash machine, with hooked clients, at very low valuations.

But you need to be either private investor or fund manager that doesn’t care about doing the politically correct thing.