KUALA LUMPUR (Aug 30): Shares of Spritzer Bhd (KL:SPRITZER) climbed on Friday to their highest in more than two months, after the mineral water company reported better-than-expected results.
Spritzer rose as much as 6.2% or 16 sen to RM2.75, its highest since June 26. The stock was trading at RM2.70 at 9.25am, giving the company a market capitalisation of RM862 million. Trading volume totalled 141,500 shares so far.
BIMB Securities in a note on Friday upgraded its recommendation on the stock to 'buy', with a target price of RM2.90, after raising its earnings forecasts for the financial year ending Dec 31, 2024 (FY2024) to FY2026.
"We have increased our earnings forecasts for FY2024-FY2026 by 6%-9%, after factoring in lower input cost and higher margin assumptions," the house said.
BIMB Securities anticipates Spritzer's sales volume growth to be driven by higher tourist arrivals for the year, and a pre-Chinese New Year surge in sales due to stock-up.
Additionally, the house believes Spritzer will benefit from a decline in raw material costs, particularly PET resin, and to benefit from a stronger ringgit, as its raw materials are quoted in US dollars.
The house noted that Spritzer is also diversifying its product portfolio, with the new line anticipated to commence in October.
Spritzer's net profit of RM35.3 million for the first half ended June 30, 2024 (1HFY2024) came in above the house's expectations at 65% and above the consensus at 64%.
For the second quarter ended June 30, 2024 (2QFY2024), revenue rose 18% year-on-year, while net profit increased 63%, driven by higher bottled water sales volume and a reduction in raw material costs.