IPO gives Philip Morris a fillip

The shares of Philip Morris International Inc, the world's largest non-state-owned cigarette maker, increased by as much as 6 percent on Monday (local time), but later gave up those gains in their first day of trading after the company was spun off from Altria Group Inc.

The shares, which traded as high as $54.21, ended the day down 48 cents at $50.58. Altria shares fell 57 cents, or 2.5 percent, to $22.20.

Analysts did not immediately return phone calls or declined to comment on the stock fall after markets closed.

Investors have long anticipated the Philip Morris International spinoff as a way to get a pure play on the growing overseas tobacco business without being tied to a shrinking US cigarette market.

The company trails only China National Tobacco Co in terms of global market share.

Philip Morris International has forecast an annual growth in earnings per share of between 10 percent and 12 percent.

Altria expects its own earnings growth to be 8 percent to 10 percent annually.

Earlier this month, Philip Morris International Chief Operating Officer Andre Calantzopoulos said that there were plenty of areas to grow the cigarette business, noting that only one in six smokers around the world smokes a brand manufactured by Philip Morris.

He said that the company has little or no presence in large cigarette markets such as China, Vietnam, India and Bangladesh.

Stifel Nicolaus analyst Chris Growe initiated coverage of Philip Morris International on Monday with a "buy" rating and a stock price target of $58.

"We believe PMI should be valued at least in line with its peer international companies in light of its strong growth opportunities (developing markets), premium portfolio, size and scale advantages, and impressive free cash flow generation," Growe said in a research note.

Agencies

(China Daily 04/02/2008 page16)