WELLCAL – Fundamental Analysis (1 Sep 2014)

WELLCAL Analysis:-

Excel – http://1drv.ms/1vYHp6f

My View:-

– Fair value
  – 5Y DCF:
    – 1.96 – 2.23 (MOS: 14% – 25%)
  – Absolute EY%:
    – Trailing:
      – FY13 (EPS: 0.186) – Buy below 2.37, fair value 2.71 (MOS: 38%)
      – R4Q (EPS: 0.088) – Buy below 1.13, fair value 1.29 (MOS: -30.4%)
    – Forward:
      – FY14 (EPS: 0.09) – Buy below 1.15, fair value 1.31 (MOS: -28.2%)
      – FY15 (EPS: 0.1) – Buy below 1.28, fair value 1.46 (MOS: -15.3%)
    – EPS applied to reach the current stock price (1.68): 0.115
  – Absolute EY% shows that WELLCAL is currently over valued, and I think it current price level already factored in its growth drivers.
  – On the other hand, 5Y-DCF indicates that WELLCAL is still undervalued in terms of cash flow. WELLCAL matches the characteristics of companies where DCF is suitable.
  – Therefore, I conclude WELLCAL is currently still undervalued.
– WELLCAL has appreciated 60% (during this time, the KLCI was only up 3% while the FBM Small Cap Index rose 19%) and dividend yield has declined to the 5% levels.
– Demand for industrial rubber hoses will continue to see gradual recovery from both the emerging and developed economies, with higher growth rates projected from the emerging markets. In the near term, WELLCAL expects the raw material prices to trend at current levels with possibly further downward inclination. The recent easing of these raw material prices has enabled a more favourable operating environment for sustainable growth in demand and earnings.

Latest Financial – Q3 2014 Financial Report (29 Aug 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1727389

At the time of writing, I did not own shares of WELLCAL.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s