Highlights

MIDF Sector Research

Author: sectoranalyst   |   Latest post: Tue, 7 Jan 2020, 10:50 AM

 

Spritzer Berhad - Positive Surprise From 3QFY20

Author:   |    Publish date:


KEY INVESTMENT HIGHLIGHTS

  • 9MFY20 earnings exceeded expectation
  • Earnings for the period declined by 14.3%yoy to RM21.2m while revenue fell by 17.9%yoy to RM235.8m
  • 3QFY20 net profit jumped by 13.7%yoy to RM10.4m although revenue slipped by 9.1%yoy to RM88.6m
  • Earnings revised by +19.6% for FY20E
  • Maintain TRADING BUY with an unchanged TP of RM2.34

9MFY20 earnings exceeded expectation. Spritzer’s net profit the nine-month period made up 94% of our full year estimates. The aboveexpectation earnings can be attributed to lower-than-expected operating expenses. No dividend was announced during the quarter.

Earnings for the period declined by -14.3%yoy to RM21.2m while revenue fell by -17.9%yoy to RM235.8m. Sales for the period was negatively affected by the pandemic as more people stayed at home, thus reducing the demand for bottled water. Notably, sales from the hotel, restaurant and café channels (HORECA) were badly impacted particularly during the Movement Control Order (MCO) period in 2QFY20.

3QFY20 net profit jumped by +13.7%yoy to RM10.4m although revenue slipped by -9.1%yoy to RM88.6m. Results for the quarter surprised on the upside. This can be attributed to low raw material for packaging, lower sales and marketing expenditure as well as other operating expenses. Notably, costs of sales declined by 14%yoy, which was steeper than the decrease in sales. Due to savings from packaging input costs as well as lower sales and distribution expenses, net profit improved by +13.7%yoy despite lower sales.

Earnings revised by +19.6% for FY20E. While we are positively surprised by the 3Q results, we expect that 4Q results may likely be softer comparatively. We believe the reintroduction of CMCO is likely to dampen demand for bottled water again. The HORECA segment is likely to be negatively impacted by the CMCO as well. Besides, we also think that sales in 3Q might be supported by a spike in demand due to a major unscheduled water disruption that affected millions in the Klang Valley. Meanwhile, we leave our FY21F estimates unchanged.

Maintain TRADING BUY with an unchanged TP of RM2.34. Our TP is derived from valuation of 17.5x PER pegged to FY21F EPS of 12.3sen. At current price, PER is estimated at 14.5x for FY20E and 13.8x for FY21F, which is rather attractive for a consumer staple company. This is supported by its strong cashpile of RM26.9m alongside other investments of RM60.8m. On top of that, it is trading below its net asset per share of RM2.04.Dividend yield is estimated at 2.2%

Source: MIDF Research - 26 Nov 2020

Share this
Labels: SPRITZER

Related Stocks

Chart Stock Name Last Change Volume 
SPRITZER 1.86 -0.03 (1.59%) 51,100 

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Stock Screener using Technical and Fundamental criteria
MQ Affiliate
Join the MQ Affiliate Program today to earn rewards
 
 

275  849  537  455 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 DNEX 0.30+0.04 
 DNEX-WD 0.06+0.015 
 BIOHLDG 0.295-0.005 
 XOX 0.08-0.01 
 PHB 0.0250.00 
 XOX-WC 0.020.00 
 LUSTER 0.195+0.01 
 VIZIONE 0.225-0.045 
 QES 0.365-0.015 
 AT 0.175-0.005 

FEATURED POSTS

1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!

TOP ARTICLES

1. Tan Sri Lim: “Being sick is being abnormal.” TOPGLOV allows only 2 paid sick leave p.a. LHL please make a police report if what you says is true! gloveharicut
2. Intco, Top Glove, Supermax - A Quick Comparison Trying to Make Sense Bursa Investments
3. Jaks Resources - Final Update :- Jaks Hai Duong Power Plant achieved FULL COD ! DK
4. Bargain hunting lifts GLOVEs share prices, say analyst, fund manager as situation remains 'volatile' gloveharicut
5. Eurocham: No mention of lockdown after Feb 4 in meeting with Miti save malaysia!
6. CIMB: FREIGHT is trading at a 60.9% & 30.8% discount to its local & regional peers gloveharicut
7. Health Ministry says govt not keen to implement MCO for a long period save malaysia!
8. Supermax record profit must prevail - Koon Yew Yin Koon Yew Yin's Blog
PARTNERS & BROKERS