Sabah-based Life Water Bhd appears to have gained more life after it surged to a 1-month high and closed above the 90 sen resistance on Tuesday. It opened 18.46% higher than its initial public offering (IPO) price as it made its debut on the Main Market of Bursa Malaysia on Nov 13. The beverage manufacturer rose to 77 sen a share at the start of Wedensday trading, representing a 12 sen premium over its IPO price of 65 sen.

Investors’ Interest in the stock mainly stemmed from its exposure in East Malaysia. The company, which specialises in bottled water, carbonated drinks and packaging products with several manufacturing facilities across Sabah, plans to use the proceeds to expand into Sarawak and Brunei and enhancing distribution in Tawau with a dedicated centre. These expansion efforts are expected to boost Life Water’s output and revenues hence its growth trajectory

The company's key initiatives include scaling up production and launching a new plant in Keningau, adding 59m litres of capacity to 448 million litres of drinking water by December 2024. Additionally, two new production lines are planned for Sandakan by 2025 and 2027, each adding 178 million litres.

Life Water currently has three manufacturing plants producing up to 389 million litres of drinking water and 37 million litres of carbonated drinks and fruits. Meanwhile,Plant 2 in Kota Kinabalu Industrial Zone 8, slated for completion in 2027, will introduce advanced manufacturing processes and expand the company's packaging capabilities.

It also has a dividend policy of a minimum of 20% of net profit. Analysts expect forward dividend yields of 1.9%, 2% and 2.3% for FY25F, FY26 and FY27. Life Water also plans to expand its plastic packaging facilities in Kota Kinabalu with the IPO proceeds, finance working capital, and defray listing expenses.

The company currently depends on only one single source of public water supply. To counter potential disruption of water supply, Life Water has four manufacturing facilities in the state, while maintaining a minimum seven-day stock of water.

The company has more than 75 delivery trucks and external logistics partners to ensure timely distribution even to remote areas. Further, Life Water aims to deepen its market penetration into Sarawak and Brunei by appointing local distributor agents.

The company’s strategy includes a new warehouse facility in Tawau, located near the Kalimantan border, to tap into the growing demand in East Malaysia and beyond. Its recent automation initiatives have mitigated the impact of an increase in wages.