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Coca-Cola HBC AG CCH

Morningstar Rating
GBX 2,410.00 +22.00 (0.92%)
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Company Report

CCEP and CCHBC: We See Investment Opportunity for CCHBC as Market Underestimates Earnings Power

Europe-based Coca-Cola Europacific Partners, or CCEP, and Coca-Cola Hellenic Bottling Company, or CCHBC, rank as the second- and third-largest Coke bottlers globally by volume, and both earn a narrow economic moat rating based on strong route-to-market operations in their authorized territories. We don't foresee material differences in the two bottlers' top-line growth—both are at 4% annually excluding acquisitions—and cash conversion—free cash flows to the firm averaging 6% and 7% of sales, respectively—over the next five years. However, the CCEP stock currently trades at a 12% premium to our EUR 56 fair value estimate, while CCHBC trades at a 15% discount to our GBX 2800-per-share intrinsic valuation. We think the market is underestimating CCHBC's growth and earnings power, and we consequently view CCHBC's shares as attractive.

Price vs Fair Value

CCH is trading at a 15% discount.
Price
GBX 2,388.00
Fair Value
GBX 5,477.00
Uncertainty
Medium
1-Star Price
GBX 1,939.00
5-Star Price
GBX 7,922.00
Economic Moat
Lmvqwv
Capital Allocation
Hfnrqktg

Bulls Say, Bears Say

Bulls

CCHBC generates over half of its EBIT from emerging markets, where per capita consumption of sparkling drinks is materially lower than it is in developed markets, providing a runway for growth.

Bears

A secular consumer shift away from carbonated soda means that bottlers such as CCHBC are being forced to recapture lost volume with a range of alternative products, making the portfolio and route to market more complex.

Is it the right time to buy, sell, or hold?
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News

Trading Information

Previous Close Price
GBX 2,388.00
Day Range
GBX 2,400.002,428.00
52-Week Range
GBX 2,065.002,582.00
Bid/Ask
GBX 2,300.00 / GBX 2,440.00
Market Cap
GBX 880.96 Bil
Volume/Avg
2.0 Mil / 1.0 Mil

Key Statistics

Price/Earnings (Normalized)
12.53
Price/Sales
0.99
Dividend Yield (Trailing)
2.79%
Dividend Yield (Forward)
2.38%
Total Yield
3.18%

Company Profile

Coca-Cola HBC is the third-largest bottling partner in the Coca-Cola system by volume, behind Coca-Cola FEMSA and Coca-Cola Europacific Partners. In 2023, CCHBC sold 2.8 billion unit cases of beverages. For context, Coke’s largest bottler, Coke FEMSA, sold 4 billion unit cases in Latin America, and the second-largest—CCEP, serving Europe, Southeast Asia, and the South Pacific region—sold 3.3 billion unit cases. There is a long tail of Coke distributors, including brewers and independent operators with very small distribution territories.CCHBC is listed on the London Stock Exchange. Kar-Tess, a Luxembourg-based holding company, owns 23% of the equity of CCHBC, and Coca-Cola holds a further 21%. The remaining 56% is free float.
Sector
Consumer Defensive
Industry
Beverages - Non-Alcoholic
Stock Style Box
Mid Core
Total Number of Employees
32,747

Competitors

Valuation

Metric
CCH
CCEP
AC
Price/Earnings (Normalized)
12.5316.599.36
Price/Book Value
3.353.472.66
Price/Sales
0.991.541.63
Price/Cash Flow
8.6011.8112.35
Price/Earnings
CCH
CCEP
AC

Financial Strength

Metric
CCH
CCEP
AC
Quick Ratio
0.790.680.97
Current Ratio
1.020.911.24
Interest Coverage
10.9014.208.92
Quick Ratio
CCH
CCEP
AC

Profitability

Metric
CCH
CCEP
AC
Return on Assets (Normalized)
7.72%5.78%8.26%
Return on Equity (Normalized)
24.88%22.01%18.34%
Return on Invested Capital (Normalized)
11.86%9.14%11.24%
Return on Assets
CCH
CCEP
AC
See how this stock stacks up to its competitors with Morningstar Investor

Beverages - Non-Alcoholic Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
KO
Coca-Cola CoRvvsyrcbZxtdp$254.0 Bil
PEP
PepsiCo IncYvfdqlmybPld$233.0 Bil
NNFSF
Nongfu Spring Co Ltd Class H Ordinary SharesNdr$61.8 Bil
MNST
Monster Beverage CorpVyyxcjyBksncp$57.3 Bil
KDP
Keurig Dr Pepper IncKsnhdtkNlckrgq$41.8 Bil
CCEP
Coca-Cola Europacific Partners PLCSyntkprhQykcv$30.4 Bil
KOF
Coca-Cola Femsa SAB de CV ADRRfvngnlzrLfwv$19.3 Bil
COCSF
Coca-Cola Femsa SAB de CV Series LFtcw$18.8 Bil
CELH
Celsius Holdings IncWhymbjnwqMntc$16.3 Bil
PRMW
Primo Water CorpRfzrpclfJcxl$2.9 Bil

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