Spritzer Massive Capex

A couple of weeks ago..

• Spritzer posts higher 3Q net profit on-year of RM3.2m
  Written by Melody Song
  Tuesday, 20 April 2010 21:23
  
  KUALA LUMPUR: SPRITZER BHD [] reported higher year-on-year net profit of RM3.2 million for the third quarter ended Feb 28, 2010 from RM2.43 million a year earlier.
  
  Revenue was 16.9% higher at RM32.49 million from RM27.79 million previously which was due to higher sales in various bottled water products, while earnings per share rose to 2.45 sen from 1.86 sen. No dividend was declared for the period.
  
  For the nine-month period, the company saw a 53.7% rise in net profit to RM9.42 million from RM6.13 million, while revenue was also higher at RM93.28 million from RM80.09 million.
  
  Cumulative earnings per share was 7.21 sen from 4.69 sen. No dividend was declared for the nine months ended Feb 28, 2010.
  
  On the current year prospects, Spritzer aims to maintain its upward performance with improvements in production efficiencies and emphasis on marketing strategies.
  
  “Although the new bottling plant set up in Shah Alam will only commence operations in 4Q and is not expected to have significant effect on the group’s results for FY10, the board believes it will be able to achieve higher revenue in 4Q10 on the back of increasing demand for bottled water due to the prolonged hot weather,” it said.

So earnings is better. 9 months earnings is around 9.4 million. ( see
Quarterly rpt on consolidated results for the financial period ended 28/2/2010 )

On today's Star Business: Spritzer plans RM20mil line

• Thursday May 6, 2010
  Spritzer plans RM20mil line
  By DAVID TAN
  
  Investment will raise annual output of mineral water to 170 million litres by 2011
  
  TAIPING: Spritzer Bhd plans to invest RM20mil in a new main production line at its plant in Taiping by the year-end.
  
  Group managing director Lim Kok Boon told StarBiz that the new line would increase the company’s annual output of mineral water to about 170 million litres or 10.2 million cartons by 2011.
  
  The Taiping facility presently has one main production line and six smaller ones.
  
  “This year, our production will be increased to 150 million litres or nine million cartons, from 100 million litres or six million cartons last year.
  
  “This is due to the recent commencement of our RM60mil plant in Shah Alam, which has four production lines,” Lim said.
  
  He said the higher output would also help Spritzer expand its domestic market share of mineral water by about five percentage points to 30% this year.
  
  Spritzer’s manufacturing plant in Taiping, Perak
  
  “The plant will supply drinking water to consumers in the Klang Valley and Selangor, and we anticipate savings on distribution cost,” he said.
  
  To further tap this market, the company has also acquired a strategically-located property in Kepong for future expansion of its production facilities.
  
  Lim said Spritzer planned this year to enter Vietnam and increase the range of its mineral water exports in terms of bottle size to Australia. Spritzer also exports to New Zealand, Singapore, Hong Kong and Cambodia.
  
  Although packaging and plastic raw material prices had increased, Lim said there wouldn’t be any increase in the selling price of its mineral water, as the company was still able to absorb the additional costs.
  
  He said Spritzer last year spent 5% of its RM108mil revenue on advertising and promotions.
  
  “We will spend more this year as we will launch a new health drink next month. We have received the greenlight from the Health Ministry,” he added.
  
  For the third quarter ended Feb 28, Spritzer posted RM3.2mil in net profit on revenue of RM32.5mil, compared with RM2.4mil and RM27.8mil respectively in the previous corresponding period.

So much capex. I wonder if the future returns justify the massive amount spend...