CCHBC | Sweetened by balance sheet optionality
In our new note on CCHBC we argue that the group is on track to deliver >10% annual EBIT growth in 2019-2020e by virtue of accelerating price/mix, healthy volume growth, small accretion from the latest acquisition and a less volatile FX backdrop. Longer-term, we acknowledge CCH’s exposure in high-growth territories but we caution that the >9% medium-term EBIT growth implicit in the current share price sets the expectation bar quite high and may prove a challenging undertaking, unless one subscribes to the idea that the macro/FX backdrop will remain conducive for CCH’s fundamentals.Having said that, balance sheet optionality is likely to continue driving the share price, especially since CCH has indicated that 2019 will be the year of re-leveraging. On our estimate, a transformational deal such as CCBA could justify even higher valuation. Alternatively, in the absence of M&A, assuming CCHBC were to lever up towards the low end of its targeted gearing, we would expect a special dividend near €2.4-2.5 and suggest that the current share price almost fully incorporates such a scenario.
Coca-Cola Hellenic Bottling Co. produces, sells and distributes an extensive portfolio of non-alcoholic ready-to-drink beverages. Co.'s business is engaged in producing, selling and distributing non-alcoholic ready-to-drink beverages under bottlers' agreements with The Coca-Cola Company. In some Territories, Co. also produces, sells, distributes and markets its own brands of juice and Water beverages. In addition, Co. bottles and distributes beer in Bulgaria and Former Yugoslav Republic of Macedonia and Co. distributes a selected number of third party premium spirit brands in certain central and eastern European operations.
Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.
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Our team has consistently gained recognition among institutional investors for its quality research, having ranked No. 1 team in Greece at the Extel Surveys of 2013-2016 and 2018. We have also been named Leading Brokerage Firm in Greece over 2014-2016 and in 2018.
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