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Wednesday, February 26, 2014

Well done, WellCall Holding?

Rubber hose manufacturer, Wellcall Holding Berhad just released its quarter report today. 

Revenue and net profit increased 11.2% and 38.44% respectively compared with corresponding period last year. Gross margin and net profit margin improved to 31.5% and 20.4% respectively. Lower material cost, favourable foreign exchange gain and higher utilisation of production capacity are the main causes for the improved performance. Quarter EPS is 5.43 cents. 


However, if compared with previous quarter, the group actually recorded a dip in net profit which was not in line with the increase in revenue. The report stated that the decrease in bottom line are mainly because the group is more aggressive in their pricing strategy to secure new customers and new market segment. It will help them to have a better preparation in terms of purchase order and order forecast in view of the additional production capacity once the new factory is in operation but probably will affect their margin a bit.

In terms of balance sheet, everything stays normal with a net cash position and no borrowings at all. Operating cash flow remained strong, or even better by having a better control in working capital changes. The group also spent around RM5 mils in capex on PPE this quarter which is consider higher compared to previous few quarters. 

Export market still the main contributor with 89.5% contribution to the group's revenue, while the rest came from local. With the stronger USD nowadays compared to previous quarters as well as the continue dropping trend of rubber price will benefit the group directly. The tariff hike starting in Jan should posed no problem to the group as electricity cost contributed quite small to total production costs. The report did not update the progress of the new factory, but based on previous report, the first phrase of the new factory will be ready by second quarter next year. Hopefully no delay. 

Hopefully, the group able to record at least 5.0 cents EPS for the remaining quarters given the favourable circumstances. 

5.0 cents quarter dividend being declared, on track to have at least 20 cents full year dividends this year to support its high PE and share split will be done at the end of March later. 

Can I say well done, wellcall? But I know your PE is quite high ... can you give me some discounts, pls? 

3 comments:

  1. Now the price dropped till RM1.50.. What is your opinion on this?

    ReplyDelete
    Replies
    1. Hi Angel,

      Your name so nice!! haha ..

      By the way, Wellcall price had been adjusted due to the split issue of 2.5 for 1 ordinary shares.

      Thus, if the price is RM1.50 now, the previous price before split issue should be RM3.75.

      So, the price didnt drop

      Delete
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