Sunday, December 1, 2013

Wellcall - Lower raw material prices save the day (CIMB)

Wellcall Holdings -
Current RM3.29
Target RM3.72
Lower raw material prices save the day

FY09/13 final net profit at 101% of our forecast was in line with market and our expectations. Final interim DPS was 5sen while full-year DPS was 18sen. The land for the new factory has just been finalised and construction of the facility should be completed by end-2014. We cut our FY14 EPS, raise our FY15, and introduce FY16 numbers. Our target price rises with our valuation basis unchanged at 15.5x 2015 P/E, a 10% discount to Top Glove's target P/E. Wellcall remains an Outperform. Further demand recovery and attractive dividend yields of 5-6% could catalyse the stock.


We cut our FY14 EPS, raise our FY15, and introduce FY16 numbers. Our target price rises with our valuation basis unchanged at 15.5x 2015 P/E, a 10% discount to Top Glove's target P/E. Wellcall remains an Outperform. Further demand recovery and attractive dividend yields of 5-6% could catalyse the stock.

FY13 net up 5.9% yoy
FY13 revenue was down 14.7% yoy, net profit was up 5.1% yoy, mainly due to lower raw material costs. The average annual price of SMR20, one of its main raw materials, fell 24% yoy to RM8.20/kg. Wellcall generally benefits from declining selling prices as it is able to reduce selling prices at a slower pace when raw material prices fall. Interim DPS was 5sen, above our expectations. YTD, an 18sen DPS has declared, putting the dividend payout ratio at 96%.

Capex update
The proposed land acquisition for Wellcall's new factory was completed this month. Including the machinery, total capex is targeted at around RM30m. Once the expansion is completed at end-2014, it would raise its mandrel hose production capacity by 50% to around 38,000 tonnes annually. Mandrel hoses continue to offer the highest profit margin compared to extrusion hoses. Demand for its hoses have started picking up since 2HFY13, in line with signs of an economic recovery in the developed countries

Net cash balance sheet
Wellcall's balance sheet is strong with its RM46m in cash or RM0.35 net cash/share as at end-Sep. To sustain the 90-100% dividend payout ratio, Wellcall is likely to take on some short-term borrowings.


Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 26/11/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock