{"id":330301,"date":"2024-11-07T01:11:14","date_gmt":"2024-11-06T17:11:14","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330301"},"modified":"2024-11-07T01:11:17","modified_gmt":"2024-11-06T17:11:17","slug":"free-stock-in-focus-wilcon-depot-wlcon-7-nov-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/free-stock-in-focus-wilcon-depot-wlcon-7-nov-2024-by-rcbc-securities\/","title":{"rendered":"FREE Stock in Focus: Wilcon Depot (WLCON) – 7 Nov 2024 by RCBC Securities"},"content":{"rendered":"\n

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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>7 Nov 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 17.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We downgrade our rating for WLCON from BUY to HOLD given the slower-
than-expected performance in 9-months (9M) 2024, as net income accounted for only 59.3% of our 2024 forecast (9-month net income usually accounts for 75% of full-year earnings).<\/p>\n\n\n\n

Moreover, we expect 4Q24 to still post unfavorable numbers given the onslaught effects of bad weather to start the quarter (selected Wilcon stores closed 2 days due to Typhoon Kristine) and the yearly October anniversary promotions that could weigh on topline margins. We therefore adjusted our target price (TP) from Php19.00 to Php17.00 per share.<\/p>\n\n\n\n

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

Net income drops 22% to Php2.1 billion<\/strong><\/p>\n\n\n\n

Wilcon Depot, Inc. (WLCON) reported 3rd quarter (3Q) 2024 net income of P608 million, down 33% year-on-year (y\/y), bringing 9M 2024 net income to Php2.1 billion, down 22% and below our estimates. Net sales q\/q dropped 3.4% to Php8.5 billion and 1% y\/y to Php25.7 billion in the nine months, as its Home Depot business still struggled amid weak consumer demand despite discounting initiatives.<\/p>\n\n\n\n

Meanwhile, its gross profit (GP) declined by 5.3% to Php10.1 billion as GP margin (GPM) dropped by 5bps to 39.5%. Operating expenses (OPEX) surged 8.9% to Php7.1 billion due to higher expansion-related expenses such as trucking, depreciation & amortization, outsourced services, salaries, utilities, and rent.<\/p>\n\n\n\n

SSSG still down as drop in transaction count continues<\/strong><\/p>\n\n\n\n

Same-store-sales growth (SSSG) in 3Q 2024 came in at -8.5%, from -4.6% in the 1st half (1H) of 2024. This stamped the 6th consecutive quarter of negative SSSG (2Q23: -3.4%) as transaction count fell 3.7%, while ticket size slid 2.3% due to discounting and promotions. Softer consumer demand for home improvement and construction supplies contributed to the decline in sales.<\/p>\n\n\n\n

Earnings estimates cut<\/strong><\/p>\n\n\n\n

We slashed our 2024 net income estimate by 9% to Php3.3 billion from the previous Php3.6 billion, signifying a -6% y\/y growth. Net sales forecasts changed -1% to Php36.3 billion from Php36.6 billion, bringing gross profit to Php14.3 billion. Operating income will likely contract 8% from previous estimates due to higher OPEX. For 2025, we forecast a flat net income of Php3.3 billion from our initial 5% expected growth.<\/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>