Leading International Investment Research, Edison Investment Research

Edison Investment Research

Leading International Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Equity Bottom-Up

During H122, Britvic witnessed double-digit revenue growth and volume and price increases in all business units and strong momentum across core brands. Growth continued in the at-home channels, while out-of-home continued to recover towards pre-pandemic levels. Immediate consumption levels are now ahead of where they were before the pandemic. Growth accelerated during the half year, with revenues up 16.5% in Q1 and 20.8% in Q2. In underlying terms, revenue was up 13.6% versus H120 (ie pre-pandemic), and during April momentum has continued to be positive. The company has successfully implemented both pricing and cost actions to mitigate some cost inflation, while continuing to rebuild investment and support the business. Management expects the current geopolitical situation to result in continued cost inflation and pressure on consumer spending, at least until 2023, although Britvic expects to continue to successfully navigate these headwinds.

During H122, Britvic witnessed double-digit revenue growth and volume and price increases in all business units and strong momentum across core brands. Growth continued in the at-home channels, while out-of-home continued to recover towards pre-pandemic levels. Immediate consumption levels are now ahead of where they were before the pandemic. Growth accelerated during the half year, with revenues up 16.5% in Q1 and 20.8% in Q2. In underlying terms, revenue was up 13.6% versus H120 (ie pre-pandemic), and during April momentum has continued to be positive. The company has successfully implemented both pricing and cost actions to mitigate some cost inflation, while continuing to rebuild investment and support the business. Management expects the current geopolitical situation to result in continued cost inflation and pressure on consumer spending, at least until 2023, although Britvic expects to continue to successfully navigate these headwinds.

Britvic’s recovery continued in H2, with continued growth in at-home channels while out-of-home rebounded. GB and Brazil both posted revenue growth, while Other International was affected by weaker performance in France, caused – among other things – by poor summer weather. Organic revenue growth was 6.6%, while adjusted EBIT was up 10% on the same basis. Adjusted EPS was up 2.5% to 44.3p, as it was adversely affected by a one-off deferred tax charge. The dividend per share is 24.2p, up 12%. Current trading is encouraging, with volumes in the first six weeks of the year ahead of both FY21 and FY20. Management remains confident in making further progress with revenue, profit and margin growth in 2022 despite inflationary cost pressures.

Britvic’s recovery continued in H2, with continued growth in at-home channels while out-of-home rebounded. GB and Brazil both posted revenue growth, while Other International was affected by weaker performance in France, caused – among other things – by poor summer weather. Organic revenue growth was 6.6%, while adjusted EBIT was up 10% on the same basis. Adjusted EPS was up 2.5% to 44.3p, as it was adversely affected by a one-off deferred tax charge. The dividend per share is 24.2p, up 12%. Current trading is encouraging, with volumes in the first six weeks of the year ahead of both FY21 and FY20. Management remains confident in making further progress with revenue, profit and margin growth in 2022 despite inflationary cost pressures.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

Britvic’s Healthier People, Healthier Planet strategy proactively addresses the key environmental, social and governance (ESG) issues it faces, including consumers’ health, packaging and waste, water usage, and supply chain management. Its sustainability targets for 2025 are the continuation of ongoing actions to meet stakeholders’ expectations and contribute to a more sustainable future. At the same time, management looks far beyond the targets and takes a broad ESG approach towards both business procedures and its staff.

Britvic’s Healthier People, Healthier Planet strategy proactively addresses the key environmental, social and governance (ESG) issues it faces, including consumers’ health, packaging and waste, water usage, and supply chain management. Its sustainability targets for 2025 are the continuation of ongoing actions to meet stakeholders’ expectations and contribute to a more sustainable future. At the same time, management looks far beyond the targets and takes a broad ESG approach towards both business procedures and its staff.

Britvic - Actively addressing sustainability challenges

United Kingdom

Fevertree Drinks PLC is a beverage company. The Company produces soft drinks and mixers.

A.G. Barr p.l.c. manufactures and sells soft drinks.  The Company produces Orangina, Irn-Bru, Tizer, St. Clements, D & B, Srike Cola, Barr, and other brands at its facilities located throughout the United Kingdom.  A.G. Barr sells its products nationally.

Nichols plc is a soft drink and catering company. The Company's operations encompass the production and distribution of soft drinks and hot beverage systems, filling and supplying vending machines, providing contract packing services within the food industry, and a full range of catering services. Nichols sells its products in the UK, the Arabian peninsula, Africa and Russia.

Cranswick plc manufactures and supplies food products to grocery retailers in the United Kingdom and the food service sector.  The Company supplies fresh pork, gourmet sausages, charcuterie, cooked meats, sandwiches, and dry cured bacon.

Tate & Lyle PLC is the holding company for an international group of companies which produces and markets ingredients and solutions for the food, beverage, industrials and agriculture industries around the world. The Company's range of products includes nutritive sweeteners, industrial starches, ethanol, acidulants and animal feed.

Premier Foods PLC manufactures a range of branded and proprietary products across many food categories.  The Company sells to retailers, food service operators, plant bakeries, and food processors in the United Kingdom and worldwide.

Hilton Food Group PLC. processes, packs, and distributes meat products to international food retailers.

Hotel Chocolat Group Plc manufactures, distributes, and retails premium chocolate and cocoa-related products under the Hotel Chocolat and ChocExpress brands in the United Kingdom, Europe, and the United States. It offers cocoa and chocolate-related items, and gifts, including drinking chocolate, biscuits, wines and spirits, cookery books, baking products, and beauty products containing cocoa butter. The company sells its products through a network of 84 shops, including 5 shop + caf� formats, 2 flagship sites, and 3 sites in Copenhagen, as well as through Chocolate Tasting Clubs and online. It also issues chocolate bonds; holds properties; operates restaurants; and sells corporate gifts in the business to business market. In addition, the company operates Boucan, a luxury boutique hotel that comprises 14 guest rooms, a spa, and a restaurant. The company was founded in 2013 and is headquartered in Royston, United Kingdom.

M.P. Evans Group PLC, through its subsidiaries, operates oil palm and rubber plantations in Indonesia. The company produces crude palm oil and palm kernels. It is also involved in beef-cattle farming in Australia and the United Kingdom; property development and oil-palm fresh fruit bunches production businesses in Malaysia; and the provision of management and agronomic consultancy services. As of December 31, 2015, the company had interests in 25,400 hectares of oil-palm plantations in Indonesia; 7,400 hectares of associated smallholder co-operative schemes; 20,000 hectares oil-palm concession in South Sumatra; 70 hectares of plantation land in Peninsula Malaysia; and 8,100 hectares of oil-palm and rubber plantations in Sumatra, Indonesia. M. P. Evans Group PLC was incorporated in 1981 and is based in Tunbridge Wells, the United Kingdom.

Devro PLC produces manufactured casings for the food industry.  The Company produces collagen-based products for manufacturers of sausages, salami, hams, and other cooked meats.

Beijing Yanjing Brewery Co., Ltd. operates in the brewery industry.  The Company's products include beer, spring water, beer raw materials, feeds, yeast, and other related products.

Beijing Yanjing Brewery Co, Ltd. (000729 CH)

Chongqing Brewery Co., Ltd. manufactures and markets beer products.  The Company also produces medical preparations and capsules.

The Boston Beer Company, Inc. produces a variety of craft-brewed beers and cider products at various contract breweries and Company-owned breweries.  The Company sells its products under brand names such as Boston Beer Company, Oregon Beer and Brewing Company, Samuel Adams, and HardCore.  Boston Beer sells its products to a network of wholesale distributors.

Sapporo Holdings Ltd produces and sells alcoholic and non-alcoholic beverages.  The Company's products include beer, wine, brandy, whiskey, imported beer, soft drinks, juice, coffee, and tea.  SAPPORO HOLDINGS also operates real estate businesses.

National Beverage Corp. is a holding company for subsidiaries that market, manufacture, and distribute a full line of beverage products.  The Company's products include multi-flavored and cola soft drinks, juice and juice products, flavored carbonated and spring water products, and specialty items.

Remy Cointreau SA manufactures and distributes premium wines and spirits worldwide.  The Company produces Remy Martin cognac, Cointreau, Passoa, Mount Gay rum, Metaxa. Through its wholly-owned sales company, Remy sells throughout the world.

Royal Unibrew A/S  produces beer, ale, and soft drinks. The Company produces beer, soft drinks, orange juice, and mineral water. Unibrew distributes its products throughout Europe.

Saigon Beer - Alcohol - Beverage Corporation produces and distributes alcoholic beverages. The Company offers beer, spirits, soda, and other products. Saigon Beer - Alcohol - Beverage serves clients in Vietnam.

Anadolu Efes Biracilik ve Malt Sanayii AS is the holding company of the Efes Beverage Group. The group produces and markets beer, malt and Coca-Cola products across a geography that consists of Turkey, Russia, the CIS, countries Southeast Europe and the Middle East. Anadolu Efes is also an operating entity under which the Turkish brewing business is managed.

Anhui Kouzi Distillery Co., Ltd. produces wine. The Company also manufactures, produces and sells liquor and glassware. Anhui Kouzi Distillery operates in China.

Britvic Plc supplies a wide range of soft drinks. The Company manufactures and markets its own brand of soft drinks as well as supplies drinks manufactured by other companies.

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Britvic PLC (BVIC LN)

Britvic - Positive momentum

During H122, Britvic witnessed double-digit revenue growth and volume and price increases in all business units and strong momentum across core...

Edison Investment Research

Britvic - Emerging stronger

Britvic’s recovery continued in H2, with continued growth in at-home channels while out-of-home rebounded. GB and Brazil both posted revenue...

Edison Investment Research

Britvic - Emerging stronger

Britvic’s recovery continued in H2, with continued growth in at-home channels while out-of-home rebounded. GB and Brazil both posted revenue...

Edison Investment Research

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

Our cautious outlook is reinforced by ongoing developments. Relative strength improvement for defensives (Utilities, Staples, Real Estate, Health...

Vermilion Research

Britvic - Actively addressing sustainability challenges

Britvic’s Healthier People, Healthier Planet strategy proactively addresses the key environmental, social and governance (ESG) issues it faces,...

Edison Investment Research

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