Coca-Cola HBC: Looking beyond 2020 (upgraded to BUY)
We have upgraded Coca-Cola HBC (CCH) to BUY, with a new price target (PT) of GBp 2,383/share, offering 28% upside. The lockdowns in April hit the business hard, with volumes down 27%, and we expect 2020E to be a drag. The NARTD category is quite resilient in nature, however, and we expect CCH to benefit from customers returning to well-known, established brands as they become more cautious on costs. We see the business as flexible (two-thirds of costs are variable), with sufficient liquidity and balance sheet strength. That said, a weak 2020E is already reflected in the price, in our view, and is an opportunity for investors looking beyond this year. CCH is trading at a 2020E EV/EBITDA of 9.8x, on our estimates, 10% below the long-term average. We believe the visibility is low on how much the consensus for its other bottling peers has reflected the new reality, so CCH’s current premiums should be taken with a pinch of salt.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.
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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