Spritzer is looking to tap into greater opportunities in the hotel, restaurant and catering sector and the Singapore market.
PETALING JAYA: Spritzer Bhd
’s resilient business and dominant market position is likely undervalued by the market as its stock is trading at a 30% discount to the industry average, says RHB Research.
According to the research house, the group’s five-year historical revenue and earnings compounded annual growth rates (CAGRs) stood at 7% and 15%, respectively.
It said the CAGRs are supported by the steady growth in bottled water consumption, rising brand equity and continuous efficiency gain.
“These factors will continue to drive growth going forward, further supported by a stronger focus on export and food service and hotel markets, as well as proliferating sparkling water consumption,” RHB Research noted.
As one of the household local consumer brands, the research house said Spritzer has grown its sales consistently over the years, supported by the rising demand for bottled water as a convenient option.
This positive consumption trend is also driven by higher disposable income, urbanisation, as well as greater health and hygiene awareness.
In addition, the rapidly mushrooming modern trade network, such as MR DIY Group (M) Bhd, 99 Speedmart Retail Holdings Bhd and various convenience stores, has been instrumental in improving product accessibility.
Meanwhile, Spritzer is looking to tap into greater opportunities in the hotel, restaurant and catering (Horeca) sector and the Singapore market.
The company aims to boost its export sales by bolstering its distribution channels and partnering prominent retailers in Singapore.
It is also investing in brand building to ride on to the promising traction in Singapore due to its new packaging, which has elevated its image and competitiveness, RHB Research noted.
Additionally, Spritzer will allocate more resources to develop its Horeca channels, currently contributing 1% to total sales, as this market has been growing tremendously in recent years.
Going forward, Spritzer’s focus will be on sustaining the positive growth momentum in sparkling water sales.
The brokerage highlighted that the sales contribution of sparkling water has increased substantially from less than RM3mil in financial year 2019 (FY19) to RM4mil-RM5mil in the first half of 2024.
This growth is driven by evolving consumer demand and the company’s effective marketing initiatives, it added.
To meet the increasing demand, Spritzer recently increased its sparkling water production capacity by 3.5 times, anticipating strong growth potential and higher profitability.
However, RHB Research pointed out that potential risks to its recommendations include a sharp rise in input costs and a loss of market share.
