{"id":326370,"date":"2024-01-16T18:05:40","date_gmt":"2024-01-16T10:05:40","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326370"},"modified":"2024-01-16T18:05:41","modified_gmt":"2024-01-16T10:05:41","slug":"stock-in-focus-wilcon-depot-wlcon-16-jan-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-wilcon-depot-wlcon-16-jan-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Wilcon Depot (WLCON) – 16 Jan 2024 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>16 Jan 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 28.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We retained our net income estimates but raised our target price (TP) for Wilcon Depot (WLCON) by 20% from Php23.40 to Php28.00 as we rolled over our Discounted DCF-based valuation to our 2024 10-year EBITDA CAGR estimate of 15.3% and maintain a BUY rating. <\/p>\n\n\n\n

WLCON is also trading cheaply at a Price-Earnings (P\/E) ratio of 22.7x, lower than its 5-yr average of 32.8x albeit higher than its closest peers\u2019 average PE of 13.7x. Our Target Price offers an attractive share price upside of 27.3% and a total return potential of 29.0% inclusive of 2024 dividend yield of 1.7%.<\/p>\n\n\n\n

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

Better outlook for 2024<\/h3>\n\n\n\n

We expect Wilcon Depot (WLCON) to rebound in 2024 on a low base and expectations of interest rate cuts. Due to sticky inflation and the high interest rate environment from last year, we estimate WLCON\u2019s net income to decline 8% in 2023 but quickly bounce back in FY24 with a decent net income growth of 12% on prospects of demand picking up as inflation continues to ease complemented by new store additions as WLCON expects to reach its 100 store-count goal within the year. We also expect WLCON to benefit from the possible interest rate cuts in the latter part of the year as the microenvironment becomes more favourable to developers. <\/p>\n\n\n\n

90th store-mark<\/h3>\n\n\n\n

By the end-9M 2023, WLCON has 87 stores in its store network. With the additional opening of three more stores in the 4Q23, WLCON ended the year with 90 stores in its portfolio. As the firm expects to open a net of 10 stores for this year, we estimate WLCON to reach its goal of opening 100 stores by end-2024, earlier than the 2025 goal. We believe that contribution of new store additions should contribute significantly to topline growth, similar to last year.<\/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>