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Coca-Cola Femsa SAB de CV ADR KOF

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Volume Growth in South America Boosted Narrow-Moat Coca-Cola Femsa in Q3; Shares Attractive

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Coca-Cola Femsa’s 2021 third-quarter results keep it on track to meet our full-year estimates of 4% revenue growth and EPS of MXN 0.67 as volume growth of 11.7% in South America offset a flat performance in Mexico, which was affected by COVID-19 restrictions and poor weather. Mexico accounted for 49% and 52% of the firm’s revenue and volume in the quarter, respectively. We do not expect to make any material change to our fair value estimate of $69 per ADS on Coca-Cola Femsa and view it as undervalued.

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Company Profile

Business Description

Coca-Cola Femsa, a subsidiary of Femsa, is the largest franchise bottler of the Coca-Cola Co. by volume. The firm primarily purchases beverage concentrates from TCCC, which it processes and packages, and then distributes the finished trademark beverages to on- and off-premises retailers. While Mexico and Brazil are Coca-Cola Femsa's most important markets, generating roughly 80% of volume, the firm operates in other Central and South American countries, including Panama, Guatemala, Uruguay, and Argentina. The equity value of the firm is divvied up between Femsa (which owns series A shares), TCCC (series D), and the public, holding 47%, 28%, and 25% economic interests, respectively. Series A and D shares control 89% of the voting rights and are not publicly listed.

Calle Mario Pani Number 100, Santa Fe Cuajimalpa
Ciudad de Mexico, DF, 05348, Mexico
T +52 5515195000
Sector Consumer Defensive
Industry Beverages - Non-Alcoholic
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 80,000