• Overview. Spritzer’s 2QFY21 revenue rose 38% yoy to RM75.0m on higher sales volume. We saw sale of bottled water and related products improved 41% yoy due to last year’s low base and implementation of MCO 1.0 and subsequently CMCO environment. Additionally, operating expenses also increased by 36% attributed to the increase in selling and distribution expenses in line with the increase in sales.
• Key highlights. China sales was higher as Spritzer ventured into selling a wider range of sundry goods led to better sale for trading segment +37% yoy.  Against estimates: Inline. For the 1HFY21, net profit registered at RM10.1m is considered inline with our/consensus forecast at 30% and 34% in anticipation of robust earnings in 2H21 (higher sales to offset higher cost of production).
• Dividend. A 1 st and final dividend of 4.5sen totalling has been paid 4 th June 2021 for FY20. We estimates 5.0sen DPS to be paid for FY21, bringing payout ratio at 31%.
• Outlook. The National Immunisation Programme (NIP) has made impressive progress, which led to many state shifting towards PPN Phase 2. We expect earnings to jump in 2H21 on the back of flexibility in HORECA operation (people completing two jabs are allowed to dine-in) as well as Malaysians are now allowed to perform outdoor activities, thus aiding in a better demand for its products.
• Our call. Maintain BUY call with TP of RM2.60 by applying a PE of 16x on its FY21 EPS of 16 sen.

Source: BIMB Securities Research - 26 Aug 2021