Philip Morris CR: Stable dividends outweigh the risks (upgraded to HOLD)
We have upgraded Philip Morris CR (PMCR) to HOLD (from Sell), with a new price target (PT) of CZK 16,288/share (12% upside). The improved outlook for the core cigarette business, on higher cross-border sales as the market reopens fully, coupled with a lower cannibalisation rate from its risk-reduced products (RRPs, a c.9% share in FY20), are the key themes behind our upgrade. While we still see PMCR’s business model as unsustainable in the mid-to-long term, the near-term dividend outlook still offers a 7-8% yield for 2021/22E, on our estimates. PMCR trades at an average 2021/22E P/E multiple of 13.3x, implying a 14% premium vs. the historical average. This does not seem justified, in our view, given its weakening margin profile, but it also does not seem to be a good reason for the stock to underperform.Philip Morris CR is engaged in the production, sale, distribution and marketing of cigarettes and other tobacco products and the provision of related services. Co. manufactures the following brands of cigarettes: L & M, Bond, Marlboro, Philip Morris, Petra, Start, Sparta, and Chesterfield.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.