Yes, there is a massive consumer market with an affluent middle class on our very doorstep, which should develop more over time. The ABC The Business segment shows the massive untapped potential to be unlocked over time.
Together with its re-entry into beer, CCL is pursuing smart growth opportunities to underpin its earnings over time and it will be a very different company in 5-10 years.
Sounds like one for the bottom drawer at these prices.
The p/e of 17 is not necessarily a concern in my view. I don't think prospective buyers should overlook what the above growth initiatives are contributing to the p/e. The p/e is not that much higher than the major banks any way - WBC for example has a p/e of 14.44. CCL has an iconic brand and monopolistic characteristics (similar to major banks), as referred to below.
ETrade's research says - Coca-Cola Amatil is the dominant player in Australia and other regional markets, with strong brand recognition and excellent distribution networks. We consider the firm's narrow economic moat intact. While the Australian market is mature, substantial investment and strong economic growth in Indonesia could provide material upside over the longer term while alcoholic beverages give mild blue sky.
CCL Price at posting:
$12.33 Sentiment: Buy Disclosure: Held
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