{"id":324618,"date":"2023-08-24T00:54:16","date_gmt":"2023-08-23T16:54:16","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324618"},"modified":"2023-08-24T00:54:21","modified_gmt":"2023-08-23T16:54:21","slug":"stock-in-focus-wilcon-depot-wlcon-24-aug-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-wilcon-depot-wlcon-24-aug-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Wilcon Depot (WLCON) – 24 Aug 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>WLCON<\/td><\/tr>
Company Name<\/strong><\/td>Wilcon Depot Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>24 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Accumulate<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 32.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Despite current headwinds, we continue to find WLCON\u2019s long term prospects appealing given the housing backlog in the PH as well as the continued push of major property developers to expand outside of Metro Manila, something which WLCON has already anticipated given that majority of store openings are now concentrated in provincial areas. With these factors in mind, along with the stock’s attractive valuations, we therefore recommend clients to accumulate.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Nationwide construction figures disappoint<\/strong><\/p>\n\n\n\n

The recently released statistics on approved building permits for Q2 showed a 20% slide in the total number of new residential projects. At 24,175, we note that this is 16.8% below the median project count seen in the same period during the pre-pandemic years. These figures lie in conjunction with what we saw from WLCON in its previously reported results, as muted construction activity led to tepid revenue growth and weak same-store sales growth (SSSG). <\/p>\n\n\n\n

When further examining the sequential progression, Q3 appears to be a seasonally weaker quarter as approved permits for new residential units decline by a further median of 8.1%, while project floor area also tends to dip relative to the previous quarter. This further underscores our expectation that we may see a continuation of the same patterns from 1H 2023 in the company\u2019s 9-months (9M) 2023 results.<\/p>\n\n\n\n

\u2026But downside is already reflected in the price<\/strong><\/p>\n\n\n\n

Nevertheless, even with these negatives in play, we note that current price levels already reflect much of the weaker narrative surrounding WLCON. At its current P\/E of 22.97x, the stock is already trading at a 31.7% discount relative to its mean P\/E. We also note that when factoring in our FY23 EPS of P0.96\/sh, forward P\/E comes in at 23.78x (29.4% discount to historical mean). <\/p>\n\n\n\n

This EPS projection already accounts for the difficulties in the industry environment, via flattish earnings growth of 2.6%. As such, we believe that WLCON remains an attractive deep value play for more patient investors.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>