PETALING JAYA: Bottled-water producer Spritzer Bhd
is expected to see demand for the company’s products grow this year (FY25), fuelled by tourist and foreign worker consumption, analysts say.
The company’s margins should also be supported by lower costs for polyethylene terephthalate (PET) resin used in the production of plastic bottles.
AmInvestment Research has maintained a “buy” call on the stock with an unchanged target price of RM1.90, sustained by tourist arrivals to Malaysia which is projected to hit 31.4 million this year compared with 25 million last year.
“We believe that demand for Spritzer’s bottled-water products should continue to grow in FY25 although at a lower rate of 10% compared with the 15% to 18% increase in FY24,” the research house said.
It expects the company’s earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins will be supported by the lower PET resin costs.
The research house also expects sales volume to improve by 10% in FY25 with mineral water to continue generating most of the sales volume while premium sparkling-water products would continue improving due to being more affordable compared to foreign brands.
“We believe that Ebitda margins for sparkling water are three to five percentage points higher than mineral water.
“Revenue contribution from sparkling water rose to 2.2% in the fourth quarter ended Dec 31, 2024 (4Q24) from 1.5% in 4Q23,” the research house said.
“We think that Spritzer’s PET resin costs will remain low on the back of weak crude oil prices and a strong ringgit.”
It added that Spritzer’s PET resin costs were RM4.15 per kilogramme in 1Q25 versus RM4.39 per kilogramme in 1Q24, while packaging accounted for about 70% of production costs.
The research house said an anti-dumping duty on PET resin imports would not be expected to affect the company significantly as it sources from local and China suppliers.
Malaysia imposed anti-dumping duties on PET imports from Indonesia (37.4%) and China (2.3% to 11.7%) for five years in May.
“We reckon that half of the supplies are from local companies and another half are from China,” the research house said.
