Will WellCall Continues Its Share Price Rebound after Recent Dip?

Background

WellCall was established in 1996 and is located at Ipoh. WellCall has expertise in manufacturing a wide range of industrial rubber hoses that cater to various applications markets such as industrial and construction site, mining, automobile, petroleum, oil and gas, sea / land transportation, food and beverage, shipyard et cetera. WellCall has a global customer base, covering a total of 60 countries, and they are the largest industry rubber hose manufacturer in Malaysia.

Based on Financial Year (FY) 2015, WellCall achieved RM 158 million turnover, which is considered to be a small size enterprise. Other aspects of the company’s latest financial results are illustrated in the table below.

Since FY2011, WellCall’s revenue has been experiencing some up and downs till FY2015, with FY2013 having the lowest revenue of RM 131 million and FY2015 having their record revenue of RM 158 million.

However, net profit wise, WellCall have achieved steady increase from FY2011 till FY2015, with a total increase of 2.73 times from RM 15.3 million to RM 41.3 million or an average year to year increase of 28%. Net profit margin wise, WellCall scores a 26.13%, which is consider high for a manufacturing company, and also have a very high return on equity (ROE) at 42.54%.

One notable aspect of WellCall is their net profit margin percentage has been on an increasing trend as well, from 11.24% in FY2011 till 26.13% in FY2015. This shows that the company’s product is continuously improving and able to charge a higher premium in the market year to year with minimal effect from other external competition.

On company’s debt, WellCall has a low total debt to equity ratio of 0.18, signifies that the company has little borrowings relative to its shareholder equity value. The company’s current ratio and cash ratio are of high and healthy value of 2.68 and 1.28 respectively.

In terms of dividend, WellCall pays a generous dividend yield of 4.57%. The dividend per share of WellCall have been in an increasing trend since FY2011 from 4.8 cents to 9.2 cents in FY2015.

In conclusion, WellCall is a small size enterprise with good fundamentals, low debt and continuous increase in net profit for many years. Looking at the Trailing Twelve Months (TTM) financial figures (based on two released quarterly results till Mar 2016), both revenue and net profit of WellCall are projected to be lower than FY2015, which is not supportive to the share price growth. However, as 91% of WellCall’s revenue are from export markets, weakening of Ringgit will benefit WellCall’s revenue which is supportive to the share price growth. Therefore, short term wise, there may be some fluctuations of its share price but long term wise its share price will most likely prosper due to its good financial track records.

Next quarterly results announcement should be on the month of Aug 2016 for Q3 results.

iVolume Spread Analysis (iVSA) & comments based on iVSAChart – WellCall

On WellCall’s 6-month weekly iVSAChart, this stock is currently moving sideways with price well supported around RM2.00 level. There have been many weeks of accumulation by strong hands and this stock is set for a breakout of current level should accumulations end. For fundamental investor with the view to hold for longer term, this is indeed a good opportunity to accumulate WellCall.

Interested to learn more?

- Join our annual Investment & Market Outlook Conference on 28 Aug 2016. Free door gift WORTH RM50 awaits you. Find out more via: https://www.ivsachart.com/investconference2016.php

- Free eBook available now! Click this URL to get your free eBook of “Get Rich with Dividends by Bill Wermine and Martin Wong”: http://ivsa.getresponsepages.com/

- Find out more about iVSAChart events via: https://www.ivsachart.com/events.php

- Follow & Like us on Facebook via: https://www.facebook.com/priceandvolumeinklse/

- Contact us via: email at sales@ivsachart.com or Call/WhatsApp at +6011 2125 8389/ +6018 286 9809/ +6019 645 3376

This article only serves as reference information and does not constitute a buy or sell call. Conduct your own research and assessment before deciding to buy or sell any stock. If you decide to buy or sell any stock, you are responsible for your own decision and associated risks.