{"id":333222,"date":"2025-07-17T01:38:25","date_gmt":"2025-07-16T17:38:25","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=333222"},"modified":"2025-07-17T01:38:28","modified_gmt":"2025-07-16T17:38:28","slug":"stock-in-focus-wilcon-depot-wlcon-17-july-2025-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-wilcon-depot-wlcon-17-july-2025-by-ap-securities\/","title":{"rendered":"Stock in Focus: Wilcon Depot (WLCON) – 17 July 2025 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>17 July 2025 <\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 12.52<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Still undervalued at current prices. WLCON has been gaining traction since the start of June, with its price surging
by more than 45% since then. Despite the recent run-up, its 12M Forward P\/E Ratio of 15.3x is still more than 1 standard
deviation below (-1SD) its 5Y average of 29.3x, making it undervalued given current valuations. With this in mind, we
bestow a BUY rating on WLCON with a TP of P12.52\/share supported by a demand recovery and stable margins.<\/p>\n\n\n\n

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

Earnings recap<\/strong><\/p>\n\n\n\n

In the last earnings report, WLCON\u2019s 1Q 2025 net income dropped by -27.6% year-on-year (YoY) to P536.0-Million from P739.9-Million in the previous year, as higher operating expenses from more stores continue to weigh on profits. As such, 1Q 2025 gross profit margin (GPM) narrowed by more than 100bps YoY to 38.8% from 39.9% in 1Q 2024. This led us to downgrade WLCON to HOLD given its weak prospects.<\/p>\n\n\n\n

Approved building permits recover<\/strong><\/p>\n\n\n\n

In December 2024, we saw the lowest number of approved building permits which totaled to only 13,130 (-10.8% YoY). While in January 2025, it marked the 3rd consecutive month of decline, albeit at a more moderate pace of -0.7% YoY versus the low double-digit declines seen in Nov-Dec 2024. These numbers further improved in March and April 2025, when we saw modest recovery with residential building permits recording mid-teens growth of 13.6% to 10,184 from 8,964 in the previous year. Non-residential building permits also saw 8.5% growth YoY to 3,413 from 3,145 in the previous year. We believe this trend may continue given falling interest rates, which could help boost overall construction spending.<\/p>\n\n\n\n

Margin erosion plateaus?<\/strong><\/p>\n\n\n\n

Bloomberg forward estimates show that WLCON\u2019s gross profit margins could have plateaued already in 1Q 2025. In the previous earnings call, its weak revenues were further dragged by the faster growth of cost of sales, operating expenses, and lease-related interest expense. Given now that there is an expected recovery in revenues underpinned by rising building permit approvals and falling interest rates, we will likely see higher sales arresting the decline in WLCON\u2019s profit margins in 2Q 2024.<\/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>