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Monday, January 20, 2014

Wellcal- time for profit-taking


Technical Outlook

Wellcal has risen about 100% over the past 10 months. While it is still in an uptrend, we have to be a bit careful with this stock. Its MACD, RSI & ADX indicators have started to hook down. These are signs that the stock is likely to consolidate in the near term.


Chart 1: Wellcal's weekly chart as at Jan 16, 2014 (Source: Tradesignum)

Results Update

For QE30/9/2013, Wellcal's net profit increased by14% q-o- & 31% y-o-y to RM7.7 million while revenue dropped by 5% q-o-q & 11% y-o-y to RM33.7 million. Bottom-line improved due to lower cost of raw material, favorable exchange rate & higher sales of more profitable products.


Table: Wellcal's last 8 quarterly results


Chart 1: Wellcal's last 25 quarterly results

Valuation

Wellcal (closed at RM3.53 on Jan 16, 2014) is trading at a PE of 19 times (based on last 4 quarters' EPS of 18.6 sen). The stock is trading near its fully value.

Conclusion

Despite good financial performance and still-positive technical outlook, Wellcal is trading at demanding valuation. Based on this, I think it is time to take profit on the stock.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Wellcal.

2 comments:

billyboy said...

Hi Alex,

What's your view on YeeLee at current price? At current PE, it seems fairly attractive.

Rgds

Alex Lu said...

Hi billyboy

YeeLee's trailing PE is 6.8 times. For a consumer stock, that's very attractive.