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Swedish Match (STO:SWMA) - Fundamental Investment Case


Publication Date: 21 May 2019 - By Robert Prather By Robert Prather

Equity Fundamental Equity EU ex-UK Consumer

Initiation Date: 5/21/19

Swedish Match is a major producer of smokeless tobacco products, such as snus, moist snuff and nicotine pouches. The company also manufactures and markets machine made cigars as well as matches and lighters. Swedish Match holds the #1 position in the Scandinavian snus market and the #3 position in the US moist snuff market.

Please download the full report for details on the Bear Case outlined below.

Qualitative Concerns:

  • Struggling and competitive US moist snuff market.
  • Nicotine pouches segment is still significantly smaller than others.
  • Competitors rapidly entering nicotine pouches in both the US and Scandinavia.
  • Other segments concerning as cigars slowing and chewing tobacco declining.
  • Vaping trend adds further pressure to industry shift to snus.
  • Important pending regulatory decisions.

Fundamental Concerns:

  • Snuff and moist snuff volumes weak and declining in the US so having to push pricing to offset.
  • Mix shift in Scandinavia to segments where Swedish Match is under-indexed.
  • Increasingly large market share losses in key markets like Norway and Sweden.
  • Increased capex and low free cash flow yield resulting from growing distribution of ZYN.
  • Expensive valuation historically and versus peers.

Bottom Line: An expensive tobacco company with a struggling core business and increasing competition.

Swedish Match

Source: VR Fundamental

Pages: 66

Released: 21 May 2019

Unlock for 35 credits

The Author

Robert Prather

Equity Analyst

Industrials, Consumer, Telecom & Media, Technology



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1-15 Clere Street, EC2A 4UY
London, United Kingdom
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