Coca-Cola Icecek: Turning negatives into positives (upgraded to BUY)
We have upgraded Coca-Cola Icecek (CCI) to BUY (from Hold), with a new price target (PT) of TRY 54.3/share, offering 27% upside potential. While the ongoing COVID-19 pandemic has exposed the vulnerabilities of the on-premise channel for bottlers in more developed NARTD markets, CCI stands out, with a relatively lower share and, therefore, a smaller impact from the shutdown. Operating in a resilient product category, with superior market shares, we believe that CCI’s largely flexible cost base (c.66% of total costs), coupled with its healthy balance sheet position (1.1x net debt/EBITDA), deserves to see further outperformance. Moreover, despite the rally in the LTM, we believe the stock is still cheap, as it trades at a 36% discount vs. its own average and 38% vs. its closest regional peer, Coca-Cola HBC (BUY, PT GBp 2,383/share).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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