Wilcon Q3 profit: P607M (down 33% y/y)

Wilcon [WLCON 16.40 unch; 70% avgVol] [link] reported a Q3 net income of P607 million, down 33% y/y from its Q3/23 net income of P907 million, and down 21% q/q from its Q2/24 net income of P770 million. WLCON blamed its poor performance on “softness in demand for major home improvement and finishing construction supply”, plus the “incessant rains and bad weather... which historically tends to postpone or delay construction projects.” The company reported same-store sales declines of 5.8% for its large-format depot stores, and 4.1% for its smaller “Do-It-Wilcon” stores. WLCON said that it opened three new depot stores to increase its total count to 98, but said that “expansion-related expenses have been the major drag on net income”. WLCON is a component of the PSEi Index. Its stock is down 10% over the past month, down 21% year-to-date, and down 47% over the past three years. 

MB bottom-line: WLCON’s stock price has been throwing off that “lower highs and lower lows” look for 18 months, and it’s basically stagnant against its pre-COVID price. The theme of the big price surge in late 2021 through late 2022 was “pent-up demand” for furnishings and construction supply, but the theme since January 2023 has been “soft demand”, with a side of “expansion is expensive”. If I were a WLCON shareholder, I’d be concerned about the massive oversupply of Metro Manila condos. Glass-half-full analysis would look at the condo supply glut as a reliable source of furnishings business, since every condo sold needs appliances, furniture, and finishings. Glass-half-empty analysis would look at that same situation as a weak consolation prize compared to the ideal, which would be tandem demand from homeowners and home builders at the same time. Is WLCON doing enough to meet the customers where they are?

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