LWSABAH: Beverage Producer Posts Strong Earnings, ‘BUY’ Rating Maintained with Raised Target
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
TA SECURITIES has reiterated a ‘BUY’ recommendation for a leading beverage manufacturer, setting a target price of RM0.25, which represents a potential upside of 25.0% from its last traded price of RM0.20. This positive outlook comes on the back of robust first-quarter financial performance, driven by strategic capacity expansion and operational efficiencies.
Performance Review
For the first quarter of FY26, the company recorded a strong financial performance, with revenue climbing to RM51.2 million, a significant 20.3% year-on-year increase. Profit After Tax (PAT) also saw a commendable rise of 25% year-on-year, reaching RM9.3 million. This impressive growth was primarily attributable to higher drinking-water sales volumes, boosted by the recent expansion of production capacity at its Sandakan Sibuga Plant 1, which commenced operations in June 2025. The consolidation of Twinine’s operations further contributed to the improved financial results.
Strategic Growth Initiatives
The company is actively pursuing several growth strategies to sustain its positive momentum. Key initiatives include a substantial capacity expansion, aiming to more than double output by FY27, supported by new production lines, an expanded delivery fleet, and a strengthened warehouse network. This expansion is designed to meet rising demand in East Malaysia, partly fueled by the anticipated recovery in tourism.
Furthermore, the company is focused on regional expansion and product diversification, with plans to enter underserved markets like Sarawak and Brunei, enhance brand visibility, and introduce new products such as ‘Lemony’. The acceleration of Twinine’s B2C rollout via the company’s retail network is also a strategic priority. Margin enhancement remains a core focus, achieved through in-house PET preform production to lower costs, coupled with pricing optimisation and a shift towards a greater mix of higher-margin flavoured and value-added products.
Valuation and Outlook
The company is currently trading at an attractive FY26F Price-to-Earnings (P/E) ratio of 13.8x, which stands below the Bursa Consumer Index’s one-year forward P/E of 16.8x. This valuation positions it favorably compared to peers, with a competitor like Spritzer trading at a higher FY26F P/E of 20.4x. TA SECURITIES’ continued ‘BUY’ rating reflects confidence in the company’s robust growth trajectory and effective operational strategies.
