DCF Studio

    CCH.L · LSE · Consumer Defensive

    Coca-Cola HBC AG

    Also onConsensus Drift

    Implied value per share

    GBp 4565.19

    Market price

    GBp 4248.00

    Implied upside

    +7.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · EUR model at 0.8573

    AdjustedReports in EUR, trades in GBp. Modelled in EUR, converted at the end.
    AdjustedCapital expenditure runs at 6.0% of revenue against depreciation of 3.8%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 4565.19+7.5%
    Exit multiple
    GBp 4624.00+8.9%
    Market price
    GBp 4248.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 12.5bnEUR 13.5bnEUR 14.6bnEUR 15.8bnEUR 17.1bn+8.1%
    EBITEUR 1.3bnEUR 1.4bnEUR 1.5bnEUR 1.6bnEUR 1.8bn+8.1%
    NOPATEUR 976.0mEUR 1.1bnEUR 1.1bnEUR 1.2bnEUR 1.3bn+8.1%
    Add depreciation & amortisationEUR 481.3mEUR 520.1mEUR 562.0mEUR 607.2mEUR 656.1m+8.1%
    Less capital expenditureEUR -749.0mEUR -809.4mEUR -874.5mEUR -945.0mEUR -1.0bn+8.1%
    Less increase in working capitalEUR 128.7mEUR 139.0mEUR 150.2mEUR 162.3mEUR 175.4m-8.1%
    Free cashflow to firmEUR 836.9mEUR 904.3mEUR 977.1mEUR 1.1bnEUR 1.1bn+8.1%
    Discount factor0.96540.89970.83850.78150.7283-
    Present valueEUR 808.0mEUR 813.6mEUR 819.4mEUR 825.1mEUR 830.9m+0.7%
    Present Value Of The ForecastEUR 4.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.689Reported 0.536, pulled toward 1.0 (Blume)
    Cost of equity8.29%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 15.5bn79.8% of capital
    Total debtEUR 3.9bn20.2% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC7.30%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareEUR 53.25

    80% of EV

    Forecast FCFF, final year
    EUR 1.1bn
    Capex at depreciation, working capital in reinvestment
    EUR 1.3bn
    Less reinvestment at g/ROIC (20.7% of NOPAT)
    EUR -275.9m
    Capitalised
    EUR 1.1bn
    ROIC (reported)
    12.1%
    Terminal value, undiscounted
    EUR 22.6bn
    Terminal value, discounted
    EUR 16.4bn
    Enterprise value
    EUR 20.5bn
    Less net debt
    EUR 1.2bn
    Equity value
    EUR 19.3bn

    Exit at 9.4x EBITDA

    Value per shareEUR 53.94

    80% of EV

    Terminal value, undiscounted
    EUR 22.9bn
    Terminal value, discounted
    EUR 16.7bn
    Enterprise value
    EUR 20.8bn
    Less net debt
    EUR 1.2bn
    Equity value
    EUR 19.6bn

    Spread between methods: 1%.

    Sensitivity

    Value per share (EUR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.30%76.5883.5692.98106.44127.33
    6.30%59.8963.4467.8973.6581.44
    7.30%48.9650.9153.2556.1159.69
    8.30%41.2542.3743.6645.1846.99
    9.30%35.5236.1736.8937.7138.66

    Outlined: this model. Green text: above today's price of 49.55. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year8.1%6.6%-1.5pp
    EBIT margin10.4%9.7%-0.7pp
    Discount rate7.3%7.6%+0.3pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.