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Equity Research Department
EQU
ITY
RES
EAR
CH
(FU
ND
AM
ENTA
LS)
COCA COLA HBC
Outlook:
We upgrade our Coca Cola HBC Fair
Estimated price to 22,00Euros/Share on the
back of the published FY16 results.
FY16 results showed that the company
succeeded in obtaining an important total
revenue growth -excluding FX fluctuations-
while generating substantial operating
earnings confirming its efforts towards
operating efficiency, a fact that further
enhanced net profitability.
We retain our investment thesis as FV as
we incorporate the evidenced efforts
towards operating efficiency, the organic
growth in terms of revenues excluding FX
fluctuations and the companys ability to
generate and sustain a solid FCFF.
Date: 21/02/17
FAIR ESTIMATED PRICE: 22.00Euros/Share
Investment Thesis: FV
Key Statistics:
Valuation Date 21/02/17
Share Price 23,01
Price High 52 week 23,09
Price Low 52 week 16,79
Current num. of shares 116.915.862
P/E (E) 25
Market Cap. 2.690.233.985
EPS (E) 0,93
DPS(E) 0,44
*Closing Price as 20/02/2017
Analyst: Dimitrios Villiotis Tel: +30 210 3213913 mail:
[email protected] web: www.chryssochoidis.gr
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COCA COLA HBC-GROWTH AND OPERATING EFFICIENCY
Coca Cola HBCs FY16 results were characterized by the growth in
total revenues
excluding FX impact, the sharp reduction of operating expenses
reaching an eight year
low level and the FX volatility that affects the overall
results.
Specifically, the unit cases volumes for the Emerging and
Developing markets sector
increased with a more favorable package mix as evidenced by the
increase in revenue
per case (excluding FX) but the substantial volatility of
currency led to lower revenue
per case and decreased y-o-y revenues. In the Established market
sector the unit cases
sold were 2.43% lower than the previous year reflecting the
weaker sales in Water and
Sparkling Beverages. Despite that, the sectors revenues per case
were impacted from
the volatility of GBP during the period. In terms of operating
performance the company
reaps the profits of the efforts towards operating efficiency as
the company had the
lower operating expenses since FY08, a fact that enhances the
FCFF and the
fundamental value of the company in combination with the Net
profitability.
In our valuation model we apply a more normalized projected
revenue growth (1% from
2% previously) as we take into consideration both the
substantial impact of the
currencies and the macro environment of the regions that
contribute to the overall
revenues and facing several challenges (Russia, Nigeria) and the
evidenced softer
revenues in the Established markets region. We also incorporate
the more efficient
operating performance which is the single most important factor
for the generation of a
c.450mn. FCFF per annum especially in the case of a weaker
overall revenues
environment.
In closing remarks we consider Coca Cola HBCs as the most
valuable pick among the
Hellenic Equities universe, we are satisfied from the shares
operating performance and
we consider it as an attractive investment case among its
European peers as it is traded
10.35x in EV/EBITDA terms below the European average of 12.15x
and 1.18x in
Price/Sales ratio vs the European Price/Sales average ratio of
2.63x.
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FINANCIAL SUMMARY AND VALUATION TABLES Table I: Income
Statement
Income Statement 2016A 2017E 2018E 2019E 2020E
Total Sales 6.219.000.000 6.308.673.720 6.427.784.041
6.577.983.535 6.760.726.700
Cost of goods 3.920.200.000 3.974.464.444 4.049.503.946
4.144.129.627 4.259.257.821
Gross Profit 2.298.800.000 2.334.209.276 2.378.280.095
2.433.853.908 2.501.468.879
Operating Expenses 1.792.500.000 1.829.515.379 1.799.779.532
1.841.835.390 1.893.003.476
Impairment of intagible assets -
Restrustiring costs 20.000.000 25.000.000 25.000.000
25.000.000
Non-reccuring items -
EBITDA 838.700.000 824.693.898 898.500.564 917.018.518
933.465.403
Depreciation 332.400.000 340.000.000 345.000.000 350.000.000
350.000.000
EBIT 506.300.000 484.693.898 553.500.564 567.018.518
583.465.403
Interest 62.300.000 65.000.000 65.000.000 65.000.000
65.000.000
Investments 13.800.000
EBT 457.800.000 419.693.898 488.500.564 502.018.518
518.465.403
Taxation 113.800.000 104.923.474 122.125.141 125.504.630
129.616.351
Net Income 343.500.000 314.770.423 366.375.423 376.513.889
388.849.052
Source: Companys statements, N.Chryssochoidis Research
Department estimates.
Table II: Cash Flows
Cash Flow estimations () 2016A 2017E 2018E
EBIT 506.300.000 504.693.898 578.500.564
Taxation (1-Tax Rate) 113.800.000 25% 25%
NOPAT 392.500.000 378.520.423 433.875.423
Depreciation 332.400.000 340.000.000 345.000.000
Capital Exp. 332.000.000 300.000.000 300.000.000
IWC 12.000.000 16.343.719 2.493.049 -
NCF 380.900.000 402.176.704 481.368.472
Source: Companys statements, N.Chryssochoidis Research
Department estimates
Table III: Valuation Metrics
Growth 12/16A 12/17E 12/18E
Sales growth -2% 1% 2%
EBITDA growth 11% -2% 9%
Net Profit/Loss growth 25% -8% 16%
RATIOS 12/16A 12/17E 12/18
Debt/Equity 0,56 0,56 0,56
Capex/EBITDA 40% 36% 33%
ROE 12% 12% 12%
WACC 6,00% 6,00% 6,00%
VALUATION 12/16A 12/17E 12/18
Book Value 7,80 7,80 7,80
P/BV 0,32 0,72 0,72
P/E 25 25 25
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STOCK BROKERAGE I.S.S.A., a member of the Athens Stock Exchange,
and may not be reproduced in any manner or provided to any other
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distribute or provide it to any other person. The information
contained herein has been obtained from sources believed to be
reliable but has not been verified by N. CHRYSSOCHOIDIS
STOCK BROKERAGE I.S.S.A. The opinions expressed herein may not
necessarily coincide with those of any member of N. CHRYSSOCHOIDIS
STOCK BROKERAGE I.S.S.A. No representation or warranty (express or
implied) is made as to
the accuracy, completeness, correctness, timeliness or fairness
of the information or opinions herein, all of which are subject to
change without notice. No responsibility of liability whatsoever or
howsoever arising is accepted in relation to the
contents hereof by N. CHRYSSOCHOIDIS STOCK BROKERAGE I.S.S.A. or
any of its directors, officers or employees. This report is not an
offer to buy or sell or a solicitation of an offer to buy or sell
securities mentioned herein. N.
CHRYSSOCHOIDIS STOCK BROKERAGE I.S.S.A. may effect transactions
in or perform or seek to perform brokerage services for companies
covered. The investments discussed in this report may be unsuitable
for investors, depending on their
specific investment objectives and financial position.
/Notes /Ratings P: Market Price
MCAP: Capitalization UV / Underpriced/ Small Risk
EPS: Earnings per Share
UV1
/
Stock Price < 20% of Fair
Underpriced/ Risk
Stock Price < 10% of Fair
P/E: Price/Earnings Ratio FV / Fairly Priced/ Small Risk
10%20% of Fair
DY: Dividend Yield N/R Not Rated
ROE: Return on Equity
FV: Fair Value Price
