Spritzr- the receovery has begun!

Results Update

Spritzr has just announced its results for QE30/11/2011. Its net profit recovered substantially to its previous high. It grew by 114% q-o-q or 14% y-o-y to RM3.3 million while its turnover increased by 9% q-o-q or 26% y-o-y to RM45.1 million.


Table: Spritzr's last 8 quarterly results

From the two charts below, we can see that Spritzr's turnover has been climbing steadily for the past 20 quarters. Net profit margin took a hit in late 2010 after the completion of the Shah Alam plant- where the huge capacity was not fully utilized- resulting in under-absorption of the higher overhead; thus the lower profit margin. Spritzr's turnover can continue to rise as it slowly used up the capacity of its new plant. As such, I believe Spritzr's top-line & bottom-line would continue to improve.


Chart 1: Spritzr's last 20 quarterly results



Chart 2: Spritzr's net profit margin last 20 quarterly results

Valuation

Spritzr (currently, at RM0.85) is trading at a PE of 8.3 times (based on the annualized EPS of 10.2 sen). At this multiple, Spritzr is deemed fairly attractive for a consumer stock.

Technical Outlook

From the chart below, we can see that Spritzr has dropped back from its high of about RM1.30 in 2010 to a recent low of RM0.75. It has good horizontal support at RM0.80 while its intermediate downtrend line would pose resistance at RM0.95.


Chart 3; Spritzr's weekly chart as at Jan 30, 2012 (Source: Tradesignum)

Conclusion

Based on the good financial performance & undemanding valuation, Spritzr is rated as a good stock for long-term investment. If it can break above the intermediate downtrend line at RM0.95, it may start on its next upleg.