Coca-Cola Hellenic | Healthy outlook intact but largely priced in
Despite the slower operating momentum in Q2 – mainly due to the adverse weather – CCH remains on track to deliver double-digit adj. EBIT growth in FY19 and >40bps EBIT margin expansion, broadly in sync with consensus estimates. Looking ahead, the medium-term outlook is healthy with mgt targeting 5-6% organic revenue growth through to 2025 (underpinned by innovation and the migration towards a holistic 24/7 beverage model) and 20-40bps annual margin expansion. We estimate this translates to high single-digit annual EBIT CAGR over 2019-2025e, which is however already embedded in both our and market estimates. By implication, we see relatively limited upside risk to medium-term forecasts unless the macro/FX backdrop proves more constructive and conducive for CCH’s fundamentals.In this note, we incorporate in our valuation the sustained low interest rate environment in the light of further central bank easing (thereby lowering our WACC) while also incorporating the special dividend paid recently. Following minor changes to our operating estimates, we edge up our PT to €30.1, effectively valuing CCH at a 1-year forward PE of c20x, just small discount vs. EU beverages. We retain our Hold recommendation.
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.
Research is the backbone of Eurobank Equities' platform, with a team of 4 professionals committed to generating actionable investment ideas by providing timely research products. We are committed to offering value-added services to clients by filtering market noise and providing insights on the multiple sectors that we cover. Our universe includes 26 - large, medium and small cap - companies whose market capitalization amounts to 80-85% of the total market capitalization of the Athens Stock Exchange. Our research team also maintains the capacity to generate ad-hoc research for micro-cap listed companies.
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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