Coca Cola HBC AG

Coca Cola HBC AG (LON: CCH) is an FTSE 100 listed beverage Company, which owns, operates, and control a network of independent bottling plants, warehousing, and distribution systems.

On 12 August 2021, the Company will announce the 2021 half-year results.

Rationale for Valuation – Hold at GBX 2,493.00

• Good start in a challenging environment and continued growth in the at-home channel, with accelerating revenue in the Emerging market segment.
• As per 2021 guidance, CCH had anticipated a strong recovery in FY21 FX-neutral revenues and a decent growth in FY21 EBIT margin.
• The Company has decent fundamental metrics as it has maintained a ROE above the industry median.
• On a trailing 12 months, EV/Sales, EV/EBITDA, Price/Earnings and Price/Cash Flow multiples are significantly lower as against the corresponding multiples of the Beverages industry.
• In the last one year, the Company has delivered a sparkling return of ~37.51%, which was higher than the FTSE 100 Index.
• From a technical standpoint, 200-day SMA (GBX 2,216) supports an upside potential.

Key Risks

• CCH is exposed to overall risk regarding the volatility of financial markets.
• Moreover, the risk of water unavailability can lead to an increased cost of doing business.
• Also, the consumer environment can be weakened by the Covid-19 situation.

Q1 FY21 Trading Update (as on 12 May 2021)

(Source: Company Website)

• The Company delivered good FX-neutral revenue growth, with strong execution in the at-home channel.
• On a like-for-like basis, the volumes increased by 4.7%, driven by increased Sparkling and Energy of 10.7%.
• The Company has gained or maintained its value share in Non-alcoholic ready-to-drink and Sparkling in most markets.
• It witnessed good progress in Costa Coffee, with now selling in 16 markets.
• CCH has sustained positive price/mix development in Established markets, while it saw accelerated trends in Russia and strong momentum in Nigeria.

One Year Share Price Chart

   (Source: Refinitiv, Thomson Reuters)

Valuation Methodology: Price/Earnings (FY21E) (Illustrative)

Conclusion

Despite the continued impact of the pandemic, the Company had a good start to the year, with good revenue growth and strong execution in the at-home channel. The Company witnessed strong customer relationships with the diverse and balanced geographic footprint. For FY21, it expects a solid recovery in FX-neutral revenues, with a slight increase in EBIT margin. However, the speed and shape of recovery from the Covid-19 pandemic remain uncertain. Further, the Company would increase its marketing investment in FY21 with regards to its top-line recovery. Overall, CCH would continue to focus on efficient cost management to drive its profitability in 2021. The stock made a 52-week low and high of GBX 1,711.60 and GBX 2,583.00, respectively.

Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” recommendation for Coca Cola HBC at the closing price of GBX 2,493.00 (as on 17 May 2021) and will recommend fresh buying at the right time.

Sanofi SA

Sanofi SA (LON: 0O59) is a global biopharmaceutical Company, which focused on human health. It is transforming scientific innovation into healthcare solutions around the globe.

On 29 July 2021, the Company will release its Q2 FY21 results.

Rationale for Valuation – Hold at EUR 88.00

• Sanofi and GSK announced the positive trial results for Covid-19 vaccine and expected to be approved in Q4 FY21.
• The Company has shown improvement in revenue and profitability for Q1 FY21 on a CER basis, driven by strong sales performance from Dupixent® and Vaccines.
• Sanofi seems to be well-positioned for growth in the two largest markets (US and China). It stated that the China region would provide a positive growth outlook.
• The Company has decent fundamental metrics as it has maintained a Net margin above 11% for the last five periods.
• From a technical standpoint, 200-day SMA (EUR 83) supports an upside potential.

Key Risks

• The COVID-19 pandemic may reduce the sales in targeted markets due to fewer promotional activities and lower healthcare spending on other diseases and could, therefore significantly impact the business operations.
• Fluctuation in foreign exchange rates could affect the operational performance of the Company.

Recent News

On 6 May 2021, the Company stated that it had entered into a research collaboration for three-year with Stanford University School of Medicine This collaboration will accelerate immunology research.

Q1 FY21 Trading Update (as on 28 April 2021)

(Source: Company Website)

• Q1 sales increased by 2.4% at CER, with an increase in specialty care sales of 15.3%, Vaccines sales of 5.3% and General Medicines core assets sales of 4.4%.
• The Company delivered a strong Dupixent® performance.
• Q1 business EPS surged by 5.2% on a reported basis and 15.0% at CER, due to efficiency and sales performance.
• It had become a member of the top 5 companies of the 2021 Access to Medicine Index, while it is also progressing on implementation of the Corporate Social Responsibility strategy.

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Valuation Methodology: Price/Earnings Approach (FY21E) (Illustrative)

Conclusion

In FY21, the Company expects business EPS to be increased by high single-digit at CER. Meanwhile, it delivered a strong performance in Q1, with bringing innovative medicines to patients. Dupixent® made impressive growth in the U.S. and good uptake in global markets, including China. Moreover, in Vaccines, it delivered growth in its core segments. The Company had completed its Phase 2 study for the recombinant COVID-19 vaccine candidate. The Company remained focused on executing on strategic priorities and strengthened R&D pipeline. Overall, the Company is maintaining good momentum on the strategic priorities, and the fundamentals of Sanofi’s business stay strong. The stock made a 52-week low and high of EUR 65.86 and EUR 95.79, respectively.

Considering the uncertainties and market dynamics, we are currently maintaining the “Hold” recommendation for Sanofi SA at the closing price of EUR 88.00 (as on 17 May 2021) and will recommend fresh buying at the right time. 

*All forecasted figures and Peers/Industry information have been taken from Refinitiv, Thomson Reuters.

*Dividend Yield may vary as per the stock price movement.

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

This website is a service of Kalkine Limited. Kalkine Limited is a private limited company, incorporated in England and Wales with registration number 07903332. Kalkine Limited is authorised and regulated by the Financial Conduct Authority under reference number 579414.

The article has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. No advice or information, whether oral or written, obtained by you from Kalkine or through or from the service shall create any warranty not expressly stated. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation.

Kalkine does not offer financial advice based upon your personal financial situation or goals, and we shall NOT be held liable for any investment or trading losses you may incur by using the opinions expressed in our publications, market updates, news alerts and corporate profiles. Kalkine does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. Kalkine’s non-personalised advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested.