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SPRITZER: Robust Performance Leads to Upgraded Outlook and Target Price
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM3.06 (+10.1%) |
| Last Traded | RM2.78 |
| Recommendation |
The latest research report highlights a commendable financial performance, with the company delivering a strong set of results for the third quarter of fiscal year 2025 (3QFY25). Net profit significantly exceeded expectations, driven by robust operational efficiencies and strong market demand, leading to an upward revision in the future outlook and target price by the investment bank.
Performance Highlights
For 3QFY25, the company recorded a headline net profit of RM23.6 million, marking a substantial 37.9% year-on-year increase. On an adjusted basis, core net profit reached a record RM25.4 million. The cumulative nine-month FY25 earnings were largely in line with analyst estimates and slightly surpassed consensus expectations.
Revenue for 3QFY25 grew 16.4% year-on-year to RM169.9 million, primarily fueled by robust demand for bottled water products and an improved average selling price. This growth was further supported by a favorable product mix, particularly the flagship brand, and a resurgence in tourism activities. Critically, the company benefited from lower raw material costs and enhanced operational efficiency, which contributed to a notable 4.0 percentage point expansion in its gross profit margin to 19.1% year-on-year. Furthermore, the trading segment achieved profitability for the second consecutive quarter, contributing RM0.3 million due to higher sales and reduced expenses.
Outlook and Valuation
The investment bank foresees sustained earnings growth momentum, underpinned by resilient consumption trends for bottled water products. Future growth is expected to be driven by effective branding strategies, strategic market expansion, the continued recovery of tourism, growth in HoReCa channels, and rising household incomes. Management’s ongoing initiatives to expand production capacity and enhance operational efficiency through automation and process improvements are also expected to support future performance.
Consequently, the investment bank has revised its earnings forecasts for FY25-27F upward by 9-19%. The target price for the stock has been significantly raised to RM3.06, reflecting a re-rating of its forward Price-to-Earnings (PER) from 13x to 18x, acknowledging its superior growth prospects. The investment bank maintains a “BUY” recommendation for the stock.
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