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Wednesday, August 30, 2017

Spritzer: Earning Dropped

Result Update

For QE30/6/2017Spritzer's net profit rose 2.3% q-o-q but dropped 32% y-o-y to RM5.1 million. Revenue was mixed - rose 8.2% q-o-q but dropped 8.3% y-o-y to RM79 million. Profit before tax increased 8% q-o-q from RM7.1 million to RM7.6 million mainly due to higher revenue, which increased q-o-q mainly due to increased in average selling prices as well as sales volume increase due to festive season and hot weather. The increased revenue had more than offset 9%-increase in cost of sales and other operating expenses which was contributed by continued increase in PET resin costs and higher spending on advertising and promotion, in particular on SEA Games sponsorship.


Table: Spritzer's last 8 quarterly results


Graph: Spritzer's last 38 quarterly results

Valuation

Spritzer (closed at RM2.16 yesterday) is now trading at a PE of 9.8 times (based on last 4 "full" quarters' EPS of 22 sen). At this PER, Spritzer is still deemed very attractive for a consumer stock.

(Note: I have excluded the period ended 31/12/2016, which is actually a 1-month accounting period to reflect the change in financial year-end, in computing the last 4 quarters EPS.)

Technical Outlook

Spritzr is in a long-term uptrend line, with support at RM2.10.


Chart 1: Spritzer's monthly chart as at Aug 30, 2017_11.30  (Source: ShareInvestor.com)

Spritzer is however trending lower for the past 12 months as the share price is trapped in a downward channel. The lower line may provide support for the share price at RM2.15. This plus the support from the long-term uptrend line, SS (as noted above) at RM2.10 means that the share price is likely to stabilize soon.


Chart 2: Spritzer's weekly chart as at Aug 30, 2017_11.30  (Source: ShareInvestor.com)

Conclusion

Despite weaker financial performance, Spritzer is a good stock to consider for long-term investment based on attractive valuation and positive technical outlook.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

2 comments:

ronnie said...

Spritzer is the dominant bottled water brand in Malaysia. It was recently launched in China.

Alex Lu said...

Thank you, ronnie.