Spritzer Bhd’s share price has been consolidating sideways around RM2.17 and experienced a breakout closing at RM2.23, pending another breakout, according to Malacca Securities.
The independent research house said as the technical readings for the group’s stock are positive, the former expects a follow-through buying interest for the stock in the near term.
“Monitor for a breakout, targeting between RM2.40 and RM2.45, with a LT target at RM2.50. Support is set around between RM2.14 and 2.15, with a cut loss set around RM2.10,” it said its Technical Focus note today (Feb 5).
Malacca Securities said upward sales growth for the mineral water producer is in-line with increasing tourism activities.
“Spritzer’s earnings grew for two consecutive quarters with 3Q23 net profit came in at RM17 million, which is an increase of 48.5% year-on-year (YoY) on the back of a stronger revenue of RM132.6 million from RM119.6 million, which is an increase of 10.8% YoY.
“Stronger demand is expected for bottled water from greater domestic traveling and international tourist arrivals. Tourism Malaysia has reported a 160% YoY increase in tourist arrivals for nine months (9M) from January to September 2023.
“Going forward, global tourism levels are expected to improve gradually to pre-pandemic levels, thus the well-established Spritzer bottled water is to benefit in tandem with the increase in tourism activities,” it said.
The research house also said other trading catalyst for the group, which also manufactures and sells Polythene Terephthalate (PET) bottles, tooth brushes as well as plastics household goods, is stronger net profit margins from normalising raw material prices.
“The year-to-date (YTD) prices for PET resin has dropped and maintains at a lower level. Hence, normalising prices going forward on PET resin is expected to reduce the raw material costs for bottled water and it should improve net profit margins,” it added
