Company Update-Ccola (Tacirler Yatırım )

We are raising our target price for Coca-Cola İçecek from TL
672.00 per share to TL 985.00, in line with strong performance and
growth targets. Our 12-month target price indicates a potential return of
36%, and we maintain our BUY recommendation. The main catalysts for
our valuation are: i) the positive impact of market gains on sales volumes,
and ii) the continuation of high operational profitability. For the 2024T
period, our estimates for CCOLA show a 7.6x FD/EBITDA and 9.6x P/E
ratios, and for the 2025T period, it trades at 5.4x FD/EBITDA and 6.8x P/E
ratios.
The positive impact of market gains on sales volumes. In 2023, CCOLA
faced a series of challenges due to natural disasters, economic hardships, and
political uncertainties in key markets like Turkey and Pakistan. While the
market difficulties and the contraction in purchasing power pressured sales
volumes, strong growth achieved in Central Asia and Iraq provided
compensation. CCI exceeded $4 bn in consolidated revenues for the first time
in 2023, while maintaining operational efficiency throughout the year with
strategies to increase packaging diversity and expand its low/no sugar product
range. Inflation effects were managed through smart pricing and strategic
sourcing methods, while new products were launched.
The continuation of high operational profitability. Volume growth, along
with effective cost management, continues to enhance operational
profitability and support margins. In particular, consolidated EBITDA (Earnings
Before Interest and Taxes) increased by 26%, achieving a margin expansion of
201 basis points. Despite external economic pressures and volume challenges,
the company has been able to manage its operations and costs effectively and
maintain its profitability margins.
We are revising our expectations for 2024. Following the Q4 2023 financial
results, the company expects mid-single-digit volume-based sales growth in
2024, low currency-neutral net sales revenue growth of around 40%, and an
EBITDA margin parallel to 2023. We estimate that in 2024, net sales will
increase by 52% annually to reach 153,5 bn TL, with an EBITDA of 27.5 bn TL
at an 18% margin, parallel to 2023. During our valuation period, we forecast
an average EBITDA margin of 19.5% and a compound annual growth rate of
21.5% in net sales.
Risks: Domestically, the risk that the expected disinflation process fails to
achieve the anticipated level and represses purchasing power again, leading
to a contraction in demand both at home and abroad.


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