Credit Suisse upgrades CCH, lifts target

Analysts at Credit Suisse upgraded their recommendation Coca Cola bottler CCH and lifted their target price on the shares given its attractive top-line growth and EBIT potential.

Faster growth in asset turns should also drive stronger returns on invested capital, analysts Sanjeet Aujla, Laurent Grandent, Pavan Daswani and Clay Crumblis said in a research note sent to clients.

CCH also offered better visibility on margins via cost synergies and was expected to deliver higher organic growth than peers such as CCEP, because of its more attractive footprint in geographies with greater consumption on a per capita basis.

The bottler's low level of gearing - with net debt to EBITDA standing at just 1.3 - also meant it was better positioned to "redeploy" its balance sheet through cash returns and mergers and acquisitions.

"We believe CCH and CCEP could both participate in further consolidation of the Coca-Cola bottling network, and in particular both could exploit opportunities in Africa," the analysts said.

The broker also said it preferred shares in CCH over those of CCEP on account of its organic growth profile and near-term balance sheet optionality.

Credit Suisse upped its recommendation on CCH from 'neutral' to 'outperform' and hiked its target price from 1600p to 1950p.