WELLCAL Analysis:-
Excel – http://1drv.ms/1AmD10m
Notes – http://tinyurl.com/pjw2mrn
My View:-
Valuation:
5-Y DCF:
Good Scenario: 2.02 (Fair value uncertainty: VERY HIGH)
Base Scenario: 1.78 (Fair value uncertainty: VERY HIGH)
Bad Scenario: 1.57 (Fair value uncertainty: EXTREME)
Ugly Scenario: 1.38 (Fair value uncertainty: EXTREME)
At current price (2.12), based on RDCF, assumption of FCFF growth rate in the next 5 years is 23.5%.
Absolute EY%:
Trailing:
FY14 (EPS: 0.089) – Fair value 1.27 (Fair Value Uncertainty: EXTREME)
R4Q (EPS: 0.098) – Fair value 1.4 (Fair Value Uncertainty: EXTREME)
Forward:
FY15 (EPS: 0.12) – Fair value 1.72 (Fair Value Uncertainty: VERY HIGH)
WELLCAL (7231) – Fundamental Analysis (28 Feb 2015)
FY16 (EPS: 0.13) – Fair value 1.86 (Fair Value Uncertainty: VERY HIGH)
EPS applied to reach the current stock price (2.12): 0.148
WELLCAL’s valuation is not attractive
WELLCAL’s new factory will be commenced for commercial production by Aug/Sep 2015. With the new factory, group mandrel hose production capacity will rise by 50% to 38,000 tonnes annually. If history is an indication, it could take the company 2-3 years to fill the new plant’s capacity.
WELLCAL is a very good dividend stock where its dividend yield (based on FY14) is 6.6%. On the other hand, to sustain its dividend payments (27 Feb 2015), the company might need to borrow in the short-term to fund the estimated RM40m capex for its new plant.
Latest Financial – Q1 2015 Financial Report (26 Feb 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1886665
At the time of writing, I did not own shares of WELLCAL.
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