{"id":331179,"date":"2025-01-15T19:42:18","date_gmt":"2025-01-15T11:42:18","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=331179"},"modified":"2025-01-15T19:42:23","modified_gmt":"2025-01-15T11:42:23","slug":"stock-in-focus-wilcon-depot-wlcon-15-jan-2025-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-wilcon-depot-wlcon-15-jan-2025-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: Wilcon Depot (WLCON) – 15 Jan 2025 by Regina Capital Development Corp."},"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>Regina Capital Development Corp.<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 Jan 2025<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 14.10<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We are adjusting our recommendation for WLCON to HOLD, with a target price of P14.10\/share. Recent declines in sales volume and industry challenges have impacted performance. However, with continued expansion and a resilient construction industry showing strong growth, there remains potential for recovery. While economic uncertainties and mixed commodity trends present risks, WLCON’s strategic positioning and ongoing investments could support future opportunities as market conditions improve.<\/p>\n\n\n\n

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

The country\u2019s leading home improvement retailer, WLCON registered a decline in 9M24 performance recording a -1.0% y\/y decline in net sales and same-store sales growth (SSSG) decline of -5.9%, despite new-store sales adding 5.0% to sales y\/y. Poor performance is attributed to lower foot traffic and transaction count of -3.7% as the company struggled in 3Q24, with net income dropping by -33.10% y\/y to P608mn as net revenues fell -3.30% due to lower demand and adverse weather impacting operations, leading to declines in same-store sales growth (SSSG), transaction count, and ticket size despite opening new stores earlier in the year.<\/p>\n\n\n\n

Scanning segment performance, WLCON\u2019s depot-format stores recorded a decline in net sales of -1.5% y\/y to 24.65bn for 9M24 despite new depots contribution of 4.3% as SSSG declined by -5.8%. For small format stores, Do-It-Wilcon, rose by 34.3% y\/y driven by contributions of new stores, though SSSG dropped 4.1%, brought by lower sales of old stores. Furthermore, for project sales from major institutional accounts declined by -20.3% y\/y. <\/p>\n\n\n\n

Despite recording continuous decline in earnings, WLCON continues to increase CAPEX, recording 2.11bn in 9M24, majority of which goes to construction of new stores and warehouses. In 3Q24 alone, WLCON opened three new depots, one (1) in Visayas, one (1) in Northern Luzon, and one (1) in Southern Luzon. WLCON expects to end the year with 100 stores, and would continue to open new stores and warehouses in the succeeding years.<\/p>\n\n\n\n

As of 9M24, construction material prices in NCR showed a slowdown, which could reduce procurement costs for Wilcon Depot, potentially boosting margins. However, mixed trends in commodity prices and risks in inventory procurement could pose challenges. Meanwhile, the Philippine construction sector’s growth, driven by residential buildings, may increase demand for Wilcon Depot’s products, though potential oversupply and an upcoming infrastructure ban could hinder 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>