Spritzr: Earnings Remained Stable

Result Update

For QE30/6/2018, Spritzer's net profit dropped 1.5% q-o-q but rose 30% y-o-y to RM6.7 million while revenue rose 1.3% q-o-q or 6.5% y-o-y to RM84 million. The Group revenue increased due to increase in sales volume. Sales volume increased partly as a result of various sales campaigns carried out and also due to customers taking advantage of the special discount offered by the Group on bottled water.

The Group profit before tax increased by 23% y-o-y mainly contributed by the stabilisation and control of the selling and distribution costs for market exploration, product advertising and promotion in China market coupled with the implementation of cost control measures to manage overhead costs in China operations and investment revenue received from short term money market funds with unutilised Private Placement proceeds.

Table: Spritzer's last 8 quarterly results

Spritzr' top-line has been rising steadily for the past 12 years but its bottom-line has formed plateau and moved sideways for the past 3 years.


Graph: Spritzer's last 49 quarterly results

Valuation

Spritzer (closed at RM2.33 yesterday) is now trading at a PE of 15.7 times (based on last 4 quarters' EPS of 14.76 sen). At this PER, Spritzer is still deemed fairly valued for a consumer stock. Its dividend yield is on the low side at 2.4%.

Technical Outlook

Spritzr is in a long-term uptrend. We can use the 40-month SMA line as the proxy to determine its uptrend support.


Chart 1: Spritzer's monthly chart as at Aug 28, 2018  (Source: Malaysiastock.biz)

Spritzer has been moving sideways for the past 2.5 years. If it can break above the intermediate downtrend line, RR at RM2.45, it may continue on its prior uptrend.


Chart 2: Spritzer's weekly chart as at Aug 28, 2018  (Source: Malaysiastock.biz)

Conclusion

Despite satisfactory financial performance, fair valuation and positive long-term technical outlook, Spritzer is a good stock to consider for long-term investment.

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.