Anadolu Efes: The land where beer is cheap (stays BUY)
We maintain our BUY rating on Anadolu Efes and increase our price target (PT) to TRY 35.5/share (c.57% upside). The stock price has lagged Coca-Cola Içecek’s (CCI) by c.64ppts in the LTM, which does not seem warranted, to us, as Anadolu Efes owns a c.50% stake in CCI and also 50% of Russia’s largest brewer (with a c.29% volume share in 2020). On our numbers, Anadolu Efes trades at 5.4x on 2021E EV/EBITDA and Beer Group is at 5.1x: the latter case implies a c.62% discount vs. its international peers and a c.24% discount vs. its local consumer peers. We believe there is further growth to be captured in beer, as the re-opening is likely to have a greater impact on margins vs. CCI, which we see resulting in a c.11% EBITDA CAGR in 2020/22E (in USD terms), making the valuation quite attractive, in our view.Anadolu Efes Biracilik ve Malt Sanayii AS is a Turkey-based company, which is engaged in the production, bottling, selling and distribution of beer under a number of trademarks and also in the production, bottling, selling and distribution of sparkling and still beverages with The Coca-Cola Company trademark. The Group owns and operates more than 14 breweries, over five malt production facilities and over 15 facilities for sparkling and still beverages production. Furthermore, the Group has joint control over Anadolu Etap Penkon Gida ve Tarim Urunleri San. ve Tic. AS (Anadolu Etap) which undertakes production and sales of fruit juice concentrates and purees in Turkey. The Group also has joint control over Syrian Soft Drink Sales & Dist. LLC (SSDSD) which undertakes distribution and sales of sparkling and still beverages in Syria.
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