The first stock is Coca Cola Hellenic Bottling which has significant carbonated and soft drink sales exposure in eastern European exposure as I discussed here. At this linked note I talked about the 1250p level as an interesting one and I stick with this view making the stock currently a watch for renewed weakness (early August-esque) opportunity:
The second stock is the cosmetics and related direct sales company Oriflame which I have written about before (see here for example). I thought I was being clever in buying the stock at the SEK150 level in February on the Crimea incidents but after an early summer good performance the stock has fallen back to ten year lows:
Unsurprisingly - and using the Q2 data cited in August - the headlines were pretty shabby...
...unsurprising given Russia and closely bordered countries accounts for over 40% of sales and over a third of operating profits.
From a completely clear-headed perspective two good points and two less good points. One of my favoured metrics - price-mix - is strong...
...but whilst net debt has reduced at near x2 it is not exactly very low and interest cover has fallen to under x5 (generally below x4 the alarm bells start ringing for me).
Reflecting the above the dividend has been debased to under 2% (looks more sustainable) but still the valuation at less than x5 EV/ebit FY14e looks too low to me taking all this into account.
A final observation is the sub Euro1bn market cap of the company. This makes it less attractive to the mainstream and more prone to volatility. I think aspects of this will persist but at a forward x6 EV/ebit multiple I get a target of something in the SEK150s without too much trouble.
So an interesting mid-cap play at prevailing? I think so...
Part 3 will look at a US ADR listed entity.
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