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Spritzer Berhad – Financial Analysis:

Last updated on 25 October 2020

Company Overview:

Spritzer Berhad is a pioneer and the industry leader in bottled water. It’s operations began in 1989 as a manufacturer of bottled water products. The company is also the only listed bottled water manufacturer on KLSE. The company extracts and packages its mineral water bottles in three locations namely; Taiping (Perak), Yong Peng (Johor) and Shah Alam (Selangor) while the company’s PET bottle manufacturing plant is found in Ipoh (Perak). Currently, the group is capable of producing 700 million liters of bottled water per year.

It’s product ranges from the well-known Spritzer mineral water to an assortment of flavored drinks and drinking water. Refer to the photo below to find a visualized depiction of the company’s brands. A little less known is that the company also manufactures Cactus, Desa and Summer water bottles.

Spritzer products
Spritzer products

Core Products:

  • Spritzer
  • Cactus
  • Spritzer Sparkling (sparkling water)
  • Cactus Sparkling
  • Spritzer Tinge (non-carbonated fruit flavored water)
  • Desa
  • Spritzer POP (carbonated fruit flavored water)
  • Summer
  • Spritzer BonRica (health beverage – provides soluble dietary fiber)

Some interesting highlights of the company are that its manufacturing plants are fully automated. The company is aggressively moving into more automated processes such as the recent investment into an automated storage and retrieval system (ASRS) warehouse. This warehouse allows the company to be fully automated from manufacturing to storage and retrieval of goods. A robot would collect the packaged goods either for storage or for retrieval. This system (although expensive) would significantly increase the total storage capacity of a warehouse. Thus, increasing the efficiency of the company.

Moreover, the company’s chairman is both Yee Lee’s chairman and Spritzer’s. This brings about some synergistic benefits whereby Spritzer supplies PET bottles for Yee Lee’s manufacturing plants.

Summary of Financials

10 year Financial Summary of Spritzer
10 year Financial Summary of Spritzer

Spritzer’s 10 year results shows that the groups revenue grew at a CAGR of 12% while its PAT grew at 10%. In the meantime, the debt position of Spritzer has fallen from 66 million in 2010 to 6 million in 2019.

I would like to highlight the cash position of Spritzer. Please refer to the table above with the yellow highlight. The cash position grew substantially in 2017 due to a private placement plan with Tasik Puncak which raised RM 64 million for the company. Most of this capital is placed in a highly liquid investment which is why I considered it as a cash position.

The company does not have a dividend policy but has a historical payout ratio of 30%. The growing dividend payments are a pleasing development. Lastly, the company’s average ROE is 8%. I would have preferred an ROE which is above 10% but this is still satisfactory.

Key Ratios

Working capital per share

I tend to place some importance when the working capital per share of the company is equal to its trading price. This is because the company could be substantially undervalued. More scrutiny is required when this occurs.

Spritzer’s working capital per share is RM 0.60 per share (30% of share price), at the time of writing, the company was trading at RM 1.96 per share.

Working capital to debt ratio

This ratio would help us to quickly determine if the company is over leveraged. Typically, the working capital to debt ratio should be 3 or above. This means that the existing working capital is three times the debt. We want this to ensure that the company has sufficient liquidity to cover its debt obligations.

Of course, the best value is zero. NO DEBTS, my favourite kind of debt.

Spritzer has a total debt of 6 million which is acceptable. This gives the company a ratio of 22.

Current Ratio

The current ratio measures the current assets to its current liabilities. Preferably, I would like the current ratio to be 2.0 or above. This is another way to ensure that the company has sufficient liquidity.

Spritzer’s current ratio is 3.2 with a 10 year average current ratio of 2.1. This is good as it indicates the company has a good management on its balance sheet.

Key Considerations

  • Market leader in bottled water segment
  • Fully integrated bottle manufacturer (produces their own PET bottles).
  • Profit affected by PET resin price.
  • Company’s sales volume grows with population size (especially in growing middle income group) and hotter weather.
  • Spritzer has a 40% market share.

Valuation of the company

DCF method = RM 0.84 (5% growth rate, 7% discounted)

Dividend method = RM 0.56 (average 10 year dividend was 5.9 million)


The company is trading at RM 1.96 at the time of writing. At this price, the company is over valued. However, the business does have a competitive edge in terms of economies of scale. As the largest manufacture of bottled water, they can produce products at a significantly lower cost. Moreover, its 40% market share of the bottled water industry is a positive sign.

The main cost for the company is the price of resin (20 to 25% of cost). As global crude prices remains low, the main cost of Spritzer would fall as well. This bodes well for its near term future earnings.

Risk (Beware!)

However, I have one RED FLAG to mention before you consider investing in this company. The company has very promising growth with a well managed balance sheet. But something is bothering me, the company is constantly diluting its shareholder’s value via bonus share, bonus warrants, employee share option schemes and rights issues.

Spritzer's shareholding gradually diluted over the years.
Spritzer’s shareholding gradually diluted over the years.

Referring to the graph above, 2008 the company issued a 3:1 bonus issue. In 2015, the company issued another new 6.6 million shares from the employee share option scheme (ESOS). In 2017, the company had a private placement which saw another 27 million new shares while also exercising another 3 million new shares from ESOS. These dilution of shares would mean that the long term shareholder would see a diminishing ownership of the company.

THIS IS NOT A GOOD SIGN as this practice would reduce the shareholder’s overall value. I do not like this practice. A company with good cash flow and well managed balance sheet should not chase after growth on the expense of its shareholders so please be careful as the company may not be very shareholder friendly.

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Thanks and good luck!

Disclaimer: The article is written purely for the purpose of education and entertainment only. The content of this article is an expression of my opinion and should not be taken as professional advise. If you are seeking for professional advise, please consult your financial advisors. You should do your own research and/or seek expert’s advice when doing your investments. Any decision that you made is your own and the author should not be held accountable.


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