PETALING JAYA: Growing demand for mineral water in Malaysia bodes well for Spritzer Bhd, prompting analysts to maintain their “buy” calls on the company.
MIDF Research in a report said demand for bottled mineral water, particularly silica-rich mineral water, was growing due to concerns about health globally,
“Silica is known to help promote softer skin, shinier hair, stronger nails, and supple joints,” the research house said in a report to clients.
It noted that the management of Spritzer anticipates higher revenue for financial year 2022 (FY22), driven by robust bottled water demand and increased consumption outside of homes following the reopening of the economy.
However, it also noted that it believed that Spritzer had little room to grow its selling prices because mineral water is regarded as an essential good, and the Domestic Trade and Consumer Affairs Ministry closely monitors its prices and supplies.
On the company’s expansion plans, MIDF pointed out that the group had allocated RM45mil of its FY22 capital expenditure “to remain competitive” in Malaysia’s bottled water market.
It said it raised its earnings for Spritzer’s FY22 by 1.4% and for FY23 by 8.1% to better reflect the normalised polyethylene terephthalate resin price and the improve sales volume ahead.
“We maintain our ‘buy’ call on Spritzer as we are positive about its outlook underpinned by its defensive business nature with consistently improving demand,” it said.