The group targets to increase the production capacity to 1b litres per annum by adding a new production line in Shah Alam

by M JAY SHEILA

SPRITZER Bhd has its ‘Buy’ call retained with a revised target price of RM2.54 by a local research house for its defensive business nature, with consistently improving demand for bottled water in Malaysia.

In a note today, MIDF Research said the company’s management anticipates higher revenue for FY22, driven by robust bottled water demand and increased consumption outside the home following the reopening of the economy.

“We gather that demand for bottled mineral water, particularly silica-rich mineral water, is growing due to concerns about health and welfare have grown globally, Silica is known to help promote softer skin, shinier hair, stronger nails, and supple joints,” it said in the note after its recent visit to the company’s plant in Taiping, Perak.

At the same time, it believed that Spritzer had little room to grow its selling prices because mineral water is regarded as an essential good, and the Ministry of Domestic Trade and Consumer Affairs closely monitors its prices and supplies.

Due to its strong demand for bottled water and greater usage outside the home as a result of the economy’s recovery, MIDF predicts better revenue for FY22.

With a 40% market share in Malaysia, Spritzer’s main mineral water source is located on a 390-acre (157.83ha) rainforest site in Taiping.

The group makes significant efforts to protect the rainforest from damage and pollution, as stated on their company website.

At the plant, it was noted that Spritzer had replaced 35 forklifts with 35 automated guided vehicles to transport pallets of bottled water from a production line to a warehouse, without a driver/operator onboard.

“We believe this is advantageous because it keeps the cost of repairs and maintenance stable, prevents forklift accidents, improves operational effectiveness, and reduces the demand for foreign labour,” it said.

In 2020, the group completed its integrated warehouse with automated storage and retrieval system, with a capacity of 15,000 pallets to improve the efficiency and effectiveness of supply chain management, minimize the use of forklifts, prevented forklift accidents that causing the entire structural rack to collapse and reduce carbon footprint, MIDF added.

The group allocated RM45 million of capital expenditure for FY22 to remain competitive in Malaysia’s bottled water market with RM17 million allocated for the warehouse, RM10 million for the installation of a new water treatment plant and RM18 million for new production lines and machine upgrades.

Moving forward, the group targets to increase the production capacity to 1,000m litres per annum by adding a new production line in Shah Alam. — TMR/pic credit: www.spritzer.com.my