Coca-Cola Bottlers: Fitter than ever (Coca-Cola HBC and Coca-Cola Icecek stay BUY)
As a gradual recovery starts to become a theme for the sector this year, we remain positive on the Coca-Cola bottlers. We maintain our BUY ratings on both Coca-Cola HBC (CCH), with a price target (PT) of GBp 2,975/share, and Coca-Cola Icecek (CCI), with a PT of TRY 100.4/share. The pandemic impact varied, depending on regional exposure, as the EM region generally saw more relaxed measures after the initial wave of the pandemic. As the visibility was low for most of 2020, cost control became the key priority, as the more profitable on-premise channel was muted. Thanks to the SKU optimisation programme, we see the bottling space operating with leaner cost structures post-pandemic, and we forecast 16% and 11% EBIT CAGRs in 2020-22E for CCH and CCI, respectively (in EUR terms). On our 2021E EV/EBITDA, CCH and CCI trade at 9.6x and 6.4x, respectively, implying a 32% discount and a 9% premium vs. their bottling peers. CCH, being among the hardest hit in the sector, is our preference in the sector for 2021E.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.
Coca-Cola Icecek is a bottler and distributor of alcohol-free beverages in Turkey, Pakistan, Central Asia and the Middle East. Co. focuses on the production, sales and distribution of sparkling and still beverages with The Coca-Cola Company (TCCC) trademarks. Co. has rights to produce, sell and distribute TCCC branded beverages including Coca-Cola, Coca-Cola Zero, Coca-Cola Light, Fanta, Sprite, Cappy, Sen Sun, Powerade and Fuse Tea in TCCC authorized packages throughout Turkey. Co. also has the right to produce, sell and distribute Burn and Gladiator branded energy drinks throughout Turkey, as well as bottling and distribution rights in Turkey for Schweppes branded beverages.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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