PETALING JAYA: AmInvestment Bank has maintained a “buy” call on Spritzer Bhd
with an unchanged fair value of RM2.27 and no adjustments to its neutral environmental, social and governance rating of three stars.
The research house said there has been a robust demand for bottled water as evidenced by its current plant utilisation rate which is at 75%.
This is an increase from 70% in the third quarter of last year.
The increase was due to a market share gain from smaller players in the industry.
“The group has allocated RM36mil in capital expenditure for two additional production lines in its plants in Taiping, Perak, and Yong Peng, Johor.
“Production capacity of each plant will increase from one billion litres to 1.2 billion litres per annum,” it said.
AmInvestment Bank said work on the plant in Taiping commenced last December, whereas for Yong Peng, it would start in the first quarter of this year.
“We have already factored in the increase of 6% to revenue contribution from the new production lines in financial year 2024’s (FY24) revenue,” it pointed out.
Additionally, the research house opined that the anticipated increase of both domestic and foreign tourists during the festive season will contribute to Spritzer’s sales and in time, utilise its full production capacity.
“We expect tourism to improve in 2024 due to the 30-day visa free exemption for tourists from China and India coupled with improved flight connectivity,” it added.
