{"id":325300,"date":"2023-10-12T11:42:12","date_gmt":"2023-10-12T03:42:12","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325300"},"modified":"2023-10-12T11:42:15","modified_gmt":"2023-10-12T03:42:15","slug":"stock-in-focus-wilcon-depot-wlcon-12-oct-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-wilcon-depot-wlcon-12-oct-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Wilcon Depot (WLCON) – 12 Oct 2023 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>12 Oct 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 27.40<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We retain our target price (TP) for Wilcon Depot (WLCON) at Php27.40 based on our Discounted Cash Flow (DCF) valuation. WLCON is also currently trading cheaply at a P\/E of 22.3x, which is below its 5-year historical PE of 33.0x albeit higher than its closest peers with a median PE of around 16.9x. <\/p>\n\n\n\n

We believe that aside from its wide product offerings and market leadership, its innovative approach to market like its VR Store Experience is a game changer in the industry and should potentially add more value to WLCON. Our TP of Php27.40 offers an attractive share upside of 24.50% and a total return potential of 26.20% including a 2023 dividend yield of 1.70%. We believe WLCON warrants a BUY rating.<\/p>\n\n\n\n

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

VR Store Experience<\/h3>\n\n\n\n

We remain bullish on WLCON owing to its store network expansion as new stores capture new markets outside of Metro Manila. Developers and end-consumers may also boost earnings in the latter half of the year as they move to complete home renovations and other projects before the holidays. Moreover, we expect that its recently launched Virtual Reality (VR) Store Experience, which offers a customized and convenient way for customers to explore WLCON\u2019s product assortment without needing to personally be in-store may be a game-changer in the industry as consumer trend falls into the convenience aspect.<\/p>\n\n\n\n

Recap: Earnings performance<\/h3>\n\n\n\n

Wilcon Depot (WLCON) posted 1H 2023 net income of Php1.8 billion, 2% lower year-on-year (y\/y). Revenues grew 8% y\/y to Php17.2 billion mainly on higher contribution from new stores. Same-store sales growth (SSSG) was flattish at +0.2%. Ticket size grew +4.3% but was offset by the drop in transaction count by -4.3%. Gross profit increased by 10% to Php6.8 billion on a 90bps margin expansion to 39.5%, driven by margin improvement from the in-house and exclusive brands. Operating expenses including lease-related interest expense climbed 21% to Php4.7 billion mainly on expansion-related expenses such as depreciation and amortization and labour expenses. EBITDA was flattish at Php3.0 billion while operating income declined by 3% to Php2.4 billion.<\/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>