| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Leading beverage producer reported a strong financial performance for its fourth quarter and full financial year 2025, driven primarily by enhanced operational efficiencies and robust market demand. Public Investment Bank maintains a positive outlook, citing sustainable growth momentum and strategic initiatives.
Performance Review
For the fourth quarter of fiscal year 2025 (4QFY25), the company recorded a headline net profit of RM24.8 million, marking a significant 32.4% year-on-year increase. Its core net profit for the quarter stood at RM24.9 million, up 10.4% year-on-year. This strong performance was underpinned by a 15.0% year-on-year increase in revenue, reaching RM174.2 million, largely due to higher sales volumes and improved average selling prices (ASPs). The quarter also benefited from lower raw material costs, a favorable product mix (particularly its flagship ‘Spritzer’ brand bottled water), greater economies of scale, and ongoing operational excellence, all contributing to improved gross profit margins.
Despite the robust year-on-year growth, core net profit experienced a slight sequential decline of 2.1% quarter-on-quarter. This modest dip was attributed to higher selling and distribution expenses, alongside increased employee benefits expenses during the period.
For the full financial year 2025 (FY25), the company achieved a core net profit of RM94.0 million, aligning perfectly with Public Investment Bank’s estimates and slightly exceeding consensus expectations. Reflecting its solid financial position, the company also declared a first and final dividend of 5.0 sen per share.
Future Outlook
Public Investment Bank foresees a sustainable earnings growth momentum for the company, buoyed by the robust consumption trend for its bottled water products. This positive trajectory is expected to continue through economic resilience, the resumption of tourism activities, and a growing consumer health consciousness. Strategic efforts, including effective branding strategies and the expansion of its presence in the HoReCa (hotel, restaurant, and café) channels, are set to further bolster demand.
The company is also proactively undertaking structured expansions of its production capacity and continuous improvements in operational efficiency through automation and process enhancements. These initiatives are anticipated to lead to a modest uptick in profit margins, further supported by stronger economies of scale, stabilizing polyethylene terephthalate (PET) resin costs, and a favorable foreign exchange backdrop. Furthermore, the company is expected to benefit from new product launches and exhibits strong earnings growth potential of approximately 20% in FY26.
Investment Bank’s Perspective
Public Investment Bank reiterated its Outperform rating on the company, with a target price of RM3.30. The valuation is based on approximately 18 times projected earnings per share (EPS) for FY27F, reflecting a rollover of its valuation base year. The premium valuation is justified by the company’s leading position in Malaysia and its strong earnings growth potential.
