SPRITZER
Healthy demand for mineral water
gan-huey-ling@ambankgroup.com
+603 2036 2305
| Price | RM1.63 |
| Target Price | RM1.90 |
| 52-week High/Low | RM1.72/RM1.17 |
| Key Changes | |
|---|---|
| Target Price | ⇔ |
| EPS | ⇔ |
| YE to Dec | FY24 | FY25F | FY26F | FY27F |
|---|---|---|---|---|
| Revenue (RMmil) | 579.0 | 635.5 | 661.3 | 672.8 |
| Net profit (RMmil) | 71.1 | 74.0 | 80.5 | 82.5 |
| EPS (sen) | 11.2 | 11.6 | 12.7 | 13.0 |
| EPS growth (%) | 43.7 | 4.0 | 8.9 | 2.5 |
| Consensus net (RMmil) | 76.4 | 83.7 | 90.0 | |
| DPS (sen) | 4.0 | 4.5 | 5.0 | 5.5 |
| PE (x) | 14.6 | 14.0 | 12.9 | 12.6 |
| EV/EBITDA (x) | 3.6 | 3.9 | 3.9 | 2.7 |
| Div yield (%) | 2.5 | 2.8 | 3.1 | 3.4 |
| ROE (%) | 12.8 | 12.2 | 12.4 | 11.8 |
| Net gearing (%) | 4.6 | 3.3 | na | na |
Stock and Financial Data
| Shares Outstanding (million) | 636.7 |
| Market Cap (RMmil) | 1,037.8 |
| Book Value (RM/Share) | 0.91 |
| P/BV (X) | 0.6 |
| ROE (%) | 12.8 |
| Net Gearing (%) | 4.6 |
Major Shareholders
Yee Lee Corporation (43.2%)
Free Float
23.5
Avg Daily Value (RMmil)
0.5
Price performance
| 3mth | 6mth | 12mth | |
|---|---|---|---|
| Absolute (%) | +0.1 | +8.0 | +27.1 |
| Relative (%) | +5.3 | +12.0 | +37.3 |
Chart Description: The chart provided in the original report shows the performance of Spritzer’s stock (SPZ MK, yellow line) against the FBMKLCI Index (red line) from July 2020 to July 2024. Spritzer’s stock price shows a significant upward trend from around mid-2023, rising from approximately RM1.20 to over RM1.60 by mid-2024. The FBMKLCI Index displays more volatility but also follows a general upward trend during the same period.
Investment Highlights
We visited Spritzer’s plant in Taiping recently. The visit affirms the group’s positive outlook. We believe that demand for Spritzer’s bottled water products would continue to grow in FY25F although at a lower rate of 10% compared to the 15% to 18% increase in FY24. We reckon that demand would be supported by tourists and foreign workers. Malaysia expects to receive 31.4mil international tourists in 2025F vs. 25mil in 2024. We also expect EBITDA margins to sustain as the drop in PET resin costs offset inflationary pressures from wages and electricity. We maintain BUY on Spritzer with a target price of RM1.90/share.
- BUY with an unchanged TP of RM1.90/share. Our TP of RM1.90/share is based on a FY26F PE of 14x, which is the five-year average. Spritzer is currently trading at FY26F PE of 12.9x, which is slightly above Life Water’s 11x.
- FY25F EBITDA margin to be supported by lower PET resin costs. We estimate an EBITDA margin of 20% in FY25F vs. 19% in FY24. We think that Spritzer’s PET resin costs would remain low on the back of weak crude oil prices and a strong MYR. According to Bloomberg, average low density PET price declined by 8.4% to US$1,051/tonne in 1H2025 from US$1,148/tonne in 1H2024. Spritzer’s PET resin costs were RM4.15/kg in 1QFY25 vs. RM4.39/kg in 1QFY24. Packaging accounts for about 70% of production costs.
- Anti-dumping duty on PET resin imports is not expected to affect Spritzer significantly. Spritzer sources its PET resin from local and China suppliers. We reckon that half of the supplies are from local companies and another half are from China. Also, we believe that the stronger MYR and drop in PET prices would be enough to offset the anti-dumping duties. To recap in May, Malaysia imposed anti-dumping duties on PET imports from Indonesia (37.4%) and China (2.3% to 11.7%) for five years.
- Sales volume estimated to improve by 10% in FY25F. We believe that mineral water would continue to generate most of the sales volume. We also think that demand for the premium sparkling water products would continue improving as it is cheaper than foreign brands like Perrier and San Pellegrino. We believe that EBITDA margins for sparkling water are 3 to 5-percentage points higher than mineral water. Revenue contribution from sparkling water rose to 2.2% in 4QFY24 from 1.5% in 4QFY23.
7 Jul 2025Company profile
Spritzer is involved in the production and sale of mineral and drinking water. The group’s plant is located mainly in Taiping, Perak and Yong Peng, Johor.
Spritzer’s earnings are mainly from sale of mineral water, drinking water and non-water products such as dispensers. Mineral water under the “Spritzer” brand name accounts for 80% of the sales volume while drinking water, which comprises cheaper brands such as “Cactus” makes up another 17%. Non-water products account for the balance 3% of sales volume.
Spritzer sells its products via distributors and wholesalers. Customer segments are modern trade, general trade, convenient stores and petrol stations.
Spritzer’s operations are mainly in Malaysia. The group also has distributorships in China and Singapore.
Spritzer’s competitive edge lies in its natural mineral water products, which is sourced underground from a rainforest in Taiping, Perak. As the water is sourced naturally, it contains minerals such as silica and potassium, which are good for health. Spritzer has a market share of 40% to 45% in the mineral water industry in Malaysia.
Investment thesis and catalysts
We have a BUY on Spritzer as its FY26F PE is undemanding at 12.9x.
Share price kickers are stronger-than-expected earnings and dividends.
Valuation methodology
We applied a FY26F PE of 15x to arrive at Spritzer’s target price of RM1.90/share. The PE of 15x is the five-year average.
Risk factors
Key risks are a fall in sales volume and an increase in PET costs. PET is the main raw material used to produce the bottles.
7 Jul 2025EXHIBIT 1: VALUATIONS
| Target PE (x) | 15 |
| FY26F EPS (sen) | 12.7 |
| ESG premium | – |
| 12-month target price (RM) | 1.90 |
EXHIBIT 2: ESG RATING
| Parameters | Weightage | Rating | Rationale |
|---|---|---|---|
| Environmental assessment | |||
| 1. Carbon emissions: 45% CO2 reduction by 2030 | 40% | * * | Scope 1 emissions were 1,428 tCO2e in FY24 (FY23: 1,389 tCO2e) while Scope 2 were 42,162 tCO2e (FY23: 35,605 tCO2e) |
| 2. Packaging: Use of plastic | 40% | * * * | 100% recyclable bottles |
| 3. Minimise waste generation: Volume of waste generated | 20% | * * | Waste generated were 1,290 tonnes in FY24 vs. 971 tonnes in FY23 |
| Weighted score for environmental assessment | 100% | * * | |
| Social assessment | |||
| 1. Employee turnover: No of workforce changes | 33% | * | 44 executive resignations in FY24 vs. 33 in FY23 |
| 2. Employee safety: Lost time incident rate | 33% | * * | 15.8 in FY24 vs. 19.1 in FY23 |
| 3. Learning and development: Number of training hours | 33% | * | 8.4 hours per employee in FY24 |
| Weighted score for social assessment | 100% | * * | |
| Governance assessment | |||
| 1. Related party transactions: Value of transactions | 40% | * * | More than RM305mil in FY24 – mainly sale of goods to Yee Lee Trading Co |
| 2. Women in workforce: % of women in workforce | 30% | * * * | 57.7% of executives were women in FY24 vs. 57.2% in FY23 |
| 3. Directors’ remuneration: Value of transactions | 30% | * | RM11.7mil in FY24 vs. RM6.7mil in FY23 |
| Weighted score for governance assessment | 100% | * * | |
We accord a discount/premium of -6%, -3%, 0%, +3% and +6% on fundamental fair value based on the overall ESG rating as appraised by us, from 1-star to 5-star. Source: AmInvestment Bank
7 Jul 2025EXHIBIT 3: FINANCIAL DATA
| (RMmil, YE 31 Dec) | FY23 | FY24 | FY25F | FY26F | FY27F |
|---|---|---|---|---|---|
| Income Statement | |||||
| Revenue | 490.7 | 579.0 | 635.5 | 661.3 | 672.8 |
| EBITDA | 86.0 | 112.2 | 127.0 | 138.5 | 142.8 |
| Depreciation | (22.3) | (31.1) | (28.5) | (30.7) | (31.8) |
| Operating income (EBIT) | 63.8 | 81.1 | 98.5 | 107.8 | 111.0 |
| Other income & associates | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net interest | (1.1) | (1.7) | (2.4) | (3.2) | (3.8) |
| Exceptional items | 3.2 | 0.0 | 0.0 | 0.0 | 0.0 |
| Pretax profit | 65.9 | 79.4 | 96.1 | 104.6 | 107.2 |
| Taxation | (16.4) | (8.3) | (22.1) | (24.1) | (24.7) |
| Minorities/pref dividends | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Profit from discont op | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net profit | 49.5 | 71.1 | 74.0 | 80.5 | 82.5 |
| Balance Sheet | |||||
| Fixed assets | 473.4 | 526.1 | 547.6 | 569.0 | 587.3 |
| Intangible assets | 0.2 | 0.3 | 0.3 | 0.3 | 0.3 |
| Other long-term assets | 12.4 | 12.0 | 13.7 | 14.7 | 15.7 |
| Total non-current assets | 486.1 | 538.4 | 561.6 | 583.9 | 603.2 |
| Cash & equivalent | 30.2 | 21.6 | 48.0 | 85.0 | 124.9 |
| Stock | 41.4 | 45.2 | 52.1 | 57.1 | 60.4 |
| Trade debtors | 96.0 | 121.5 | 141.1 | 148.2 | 152.4 |
| Other current assets | 34.2 | 45.5 | 45.5 | 45.5 | 45.5 |
| Total current assets | 201.9 | 233.8 | 286.7 | 335.8 | 383.2 |
| Trade creditors | 41.5 | 50.2 | 64.4 | 69.0 | 72.1 |
| Short-term borrowings | 17.3 | 23.0 | 38.0 | 53.0 | 68.0 |
| Other current liabilities | 40.8 | 60.7 | 57.6 | 60.7 | 63.2 |
| Total current liabilities | 99.5 | 133.9 | 160.0 | 182.6 | 203.3 |
| Long-term borrowings | 30.4 | 25.6 | 30.4 | 30.4 | 30.4 |
| Other long-term liabilities | 29.8 | 30.6 | 30.6 | 30.6 | 30.6 |
| Total long-term liabilities | 60.2 | 56.2 | 61.0 | 61.0 | 61.0 |
| Shareholders’ funds | 527.0 | 582.0 | 627.3 | 676.0 | 722.1 |
| Minority interests | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| BV/share (RM) | 0.83 | 0.91 | 0.99 | 1.06 | 1.13 |
| Cash Flow | |||||
| Pretax profit | 49.5 | 71.1 | 74.0 | 80.5 | 82.5 |
| Depreciation | 22.3 | 31.1 | 28.5 | 30.7 | 31.8 |
| Net change in working capital | 15.4 | 21.2 | 2.4 | 3.2 | 3.8 |
| Others | (7.8) | (21.3) | (12.4) | (7.5) | (4.4) |
| Cash flow from operations | 79.4 | 102.0 | 92.5 | 107.0 | 113.8 |
| Capital expenditure | (78.0) | (70.5) | (50.0) | (50.0) | (50.0) |
| Net investments & sale of fixed assets | 10.0 | (7.9) | 0.0 | 0.0 | 0.0 |
| Others | (14.1) | (10.5) | 0.0 | 0.0 | 0.0 |
| Cash flow from investing | (82.1) | (88.9) | (50.0) | (50.0) | (50.0) |
| Debt raised/(repaid) | 32.0 | 0.9 | 15.0 | 15.0 | 15.0 |
| Equity raised/(repaid) | (4.9) | (2.4) | 0.0 | 0.0 | 0.0 |
| Dividends paid | (13.3) | (17.6) | (28.7) | (31.8) | (35.0) |
| Others | (2.4) | (3.1) | (2.4) | (3.2) | (3.8) |
| Cash flow from financing | 11.4 | (22.2) | (16.1) | (20.0) | (23.8) |
| Net cash flow | 8.6 | (9.1) | 26.4 | 37.0 | 39.9 |
| Net cash/(debt) b/f | 21.7 | 30.2 | 21.6 | 48.0 | 85.0 |
| Forex | (0.1) | 0.5 | 0.0 | 0.0 | 0.0 |
| Net cash/(debt) c/f | 30.2 | 21.6 | 48.0 | 85.0 | 124.9 |
| Key Ratios (YE 31 Dec) | FY23 | FY24 | FY25F | FY26F | FY27F |
|---|---|---|---|---|---|
| Revenue growth (%) | 13.2 | 18.0 | 9.8 | 4.1 | 1.7 |
| EBITDA growth (%) | 35.6 | 25.6 | 13.2 | 9.0 | 3.1 |
| Pretax margins (%) | 13.4 | 13.7 | 15.1 | 15.8 | 15.9 |
| Net profit margins (%) | 10.1 | 12.3 | 11.6 | 12.2 | 12.3 |
| Interest cover (x) | 79 | 65 | 52 | 43 | 37.4 |
| Effective tax rate (%) | 25 | 10 | 23 | 23 | 23.0 |
| Net dividend payout (%) | 71 | 36 | 39 | 40 | 42.4 |
| Debtors turnover (days) | 79 | 70 | 75 | 76 | 77 |
| Stock turnover (days) | 39 | 39 | 45 | 45 | 46 |
| Creditors turnover (days) | 45 | 35 | 40 | 41 | 42 |
Source: Company, AmInvestment Bank
