AmInvestment raises fair value for Spritzer to RM2.90

KUALA LUMPUR (Feb 28): AmInvestment Bank Research has maintained its “buy” rating on Spritzer Bhd at RM2.31 with a higher fair value (FV) of RM2.90 (from RM2.70) based on an unchanged FY23F PE of 15x – 0.5 standard deviation above its seven-year mean. This reflects an unchanged neutral ESG (environmental, social, and governance) rating of three stars.

In a note on Tuesday (Feb 28), the research house said Spritzer’s FY2022 results (after excluding the one-off flood insurance proceeds of RM2 million) was above house expectation, albeit within consensus.

The research house said the core earnings of RM35 million was 7% higher than its forecast and 3% above street’s.

“Hence, we raise our FY23F-FY24F earnings by 5%-6%, after imputing higher sales assumption and recovery rate for its water production.

“We also tweak our cost assumption higher to reflect on the minimal wage effect.

“Also, we introduce our FY25F earnings of RM49 million, premised on a revenue growth of 5% y-o-y (year-on-year),” it said.

AmInvestment said that y-o-y, Spritzer’s FY2022 core earnings rose 43% on the back of a 31% revenue growth, buoyed by higher sales of bottled water and related products (+31% y-o-y) from increases in volume and average selling prices.

“Sales of plastic packaging materials were also up by 24% y-o-y,” it said.