MIDF Research said it remains positive on the outlook for the company.
PETALING JAYA: There are several positive factors which are expected to drive bottler Spritzer Bhd
’s business momentum moving ahead despite some downside risks, analysts say.
A boost in production capacity, strategic capital expenditure (capex), and effective cost management are some of the factors that would drive the company’s earnings going forward.
After a recent briefing for analysts by the company, MIDF Research said it remains positive on the outlook for the company, adding that Spritzer’s capacity boost is expected to support its growth momentum.
The company’s newly installed sparkling-water line, operational since October, contributes an additional 50 million litres per year, the research house said.
It added that the expansion is aimed at diversifying its product portfolio.
Looking ahead, MIDF Research said the company’s management indicated that capex for 2025 would be lower than this year’s allocation.
This is given that significant investments had already been made this year, including for three new production lines.
“Management plans to focus on upgrading the company’s automated storage and retrieval system in 2025, while maintaining its annual maintenance capex at RM5mil.
“The spending will enhance production efficiency and storage capacity, ensuring readiness to meet rising demand,” the research house said.
Mineral water continued to anchor Spritzer’s revenue, accounting for 79% of sales.
However, the sparkling-water segment, though currently contributing only 1.9% of revenue, showed strong growth potential, as there was ample room for growth driven by rising demand and a low base, the research house said.
Export sales, primarily to Singapore, currently contribute 8% of total revenue and the company aims to deepen market penetration in Singapore, leveraging its strong brand equity.
On the cost front, polyethylene terephthalate resin prices averaged RM4.50 per kilogramme in the third quarter of 2024 (3Q24), with stability supported by a strong ringgit and Brent crude oil prices under US$75 a barrel.
This trend bodes well for gross profit margins moving forward, MIDF Research said. The research house maintained its “buy” call on the stock with a lower target price of RM3.25.
