OREANDA-NEWS. July 28, 2011. Renaissance Capital, the leading emerging markets investment bank, has expanded its research coverage of the Emerging Europe, Middle East and Africa (EEMEA) consumer goods sector,with a report initiating coverage of Turkish-listed Coca-Cola Icecek (CCI; initiated with a BUY rating and TRY28.1 target price) and Anadolu Efes (initiated at HOLD, with a target price of TRY23.5); and continuing coverage of Russia- and CEE-focused CEDC (rated HOLD, with a USD 10.6 target price) and Synergy (rated BUY, with a target price of USD 57.6).

The four stocks covered in EEMEA beverage producers: A beverage for any occasion provide exposure to the beer, vodka and non-alcoholic beverage sectors in 16 EEMEA and frontier market countries. They have combined exposure to 607mn consumers, 60% of which, the report notes, are following strong demographic trends (1.5% annual population growth; 26% under 15 years of age); 59% do not consume alcohol for cultural or religious reasons. The report notes that this group of consumers has average GDP per capita of USD 7,222 and is showing 4-7% real disposable income growth.

Renaissance analysts favour CCI and Synergy for their impressive management, proven execution record, and market consolidation opportunities, noting that “CCI should continue to expand its geographical footprint in emerging countries, including its home market of Turkey, benefiting from the high efficiency of its operations.”

On the other hand, Anadolu Efes is exposed to too many risks, according to Renaissance Capital. “Thanks to its leading market position in Turkey, which results in high beer business margins, and its 50.3% stake in the high-growth CCI business, Anadolu Efes should continue to deliver value to shareholders,” according to the report, although analysts see a number of potential issues that may hinder its growth.

CEDC is considered the least attractive of the four stocks covered, but the report signals that a re-rating remains a possibility. Renaissance analysts note that, “CEDC has been missing its guidance and 1Q11 disappointed again on volumes, revenue and margins, which the company does not expect will recover until 4Q11,” but conclude that despite financial mismanagement, CEDC still has a leading market share and a strong vodka brand portfolio in Russia and Poland.