Spritzr- bottom-line slipped on higher raw materail & labor cost

Result Update

For QE28/2/2013, Spritzr's net profit dropped 2% q-o-q but rose 36% y-o-y to RM5.0 million while revenue rose 22% q-o-q or 26% y-o-y to RM57 million. Pre-tax profit dropped 10% q-o-q due to an increase in PET resin prices.  The performance of the current quarter was also impacted by the higher employee benefit expenses as a result of the minimum wage implementation effective 1 January 2013. Revenue increased 22% q-o-q due to the increase in sales volume of bottled water.


Table: Spritzr's last 8 quarterly results


Chart 1: Spritzr's last 27 quarterly results

Valuation

Spritzr (at RM1.20 as at 11:00am) is now trading at a PE of 10.3 times (based on last 4 quarters' EPS of 11.7 sen). For a consumer staple, Spritzr is deemed very attractive.

Technical Outlook

Spritzr has broken above the 'handle' of the reliable technical formation known as the "Cup-with-handle". The only shortcoming is the lack of volume to confirm this breakout. Hopefully the stock will recruit sufficient buying support to launch into orbit.


Chart 2: Spritzr's daily chart as at April 23, 2013 (Source: quickcharts)

Conclusion

Based on good financial performance (albeit a small drop in bottom-line), attractive valuation & positive technical outlook (albeit a lack of volume), Sprritzr is a good stock for trading BUY as well as long-term investment.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Sprtizr.