• Overview. Spritzer ended the year with strongest top-line of RM100.6m during the quarter, as a result of i) strong sale of bottled water and related products (+40%), ii) improved sale of packaging materials (+12%) and higher income from mini golf operation (+123%). Trading segment jumped to RM5.6m (+29% qoq, +40% yoy) as customers stocked up in anticipation of CNY festive in China.

• Key highlights. Meanwhile, FY21’s PBT decreased to RM30.3m (-12% ytd) dragged by decrease in average selling price, compounded by an increase in manufacturing cost caused by higher raw-mat prices and packaging materials. Consequently, net profit declined by 32% to RM24.2m with net margin shrink to 7.3% (-4.2 ppts).

• Against estimates: Above. Overall, earnings registered is above our and consensus estimates at 113% and 116%.

• Outlook. We view that Spritzer’s 4QFY21 sales number offered a positive momentum, and would continue to recover in line with expected return of international tourists that would revive tourism industry further. We expect Spritzer’s earnings to rise by 32% to RM28.3m in FY22 on the back of absence of lockdown and improved in HORECA business channel. We believe the slight strengthening of ringgit this year could partly mitigate the cost pressure.

• Our call. We maintain our BUY call with TP of RM2.60, implying PER of 19.3x ( attached to +1SD 5 years historical forward PE), based on FY22 EPS 13 sen. Currently, the stock trades at an undemanding valuation of 15x FY22F PE which implies a good entry point for investors.

Source: BIMB Securities Research - 28 Feb 2022