SHARES in Wilcon Depot, Inc. went up last week despite its weak third-quarter financial performance due to softer demand for home improvement and construction.
Data from the Philippine Stock Exchange (PSE) showed a total of 6.56 million Wilcon shares worth P130.14 million were traded on Oct. 31 and Nov. 3, making it the 16th most actively traded stock during the two-day trading week.
The market was closed for public holidays on Oct. 30, Nov. 1, and Nov. 2.
Shares of the home improvement and construction supply retailer rose 3% week on week to end at P20.40 apiece on Friday from its P19.80 closing price on Oct. 27.
However, for the year so far, Wilcon鈥檚 stock is down by 30.8%.
Wilcon earlier reported that its net income reached P907.98 million in the third quarter, down by 17.8% from P1.10 billion in the same period last year.
For the first nine months, the company鈥檚 earnings declined by 7.9% year on year to P2.73 billion from P2.96 billion.
Meanwhile, gross revenues for the quarter inched up by 0.5% to P3.48 billion. For the first nine months, revenues increased by 6.6% to P10.25 billion from P9.62 billion in 2022.
Analysts attributed the 鈥渓ackluster鈥 earnings of Wilcon to its higher operating expenses compared to its sales in the third quarter.
The jump in operating expenses was mainly due to expansion-related expenses as Wilcon opened eight stores since the fourth quarter of 2022. Lance U. Soledad, research associate at China Bank Securities Corp., said in an e-mail.
Lower advertising and promotions from Wilcon鈥檚 suppliers also led to lower rent and other income, I.B Gimenez Securities, Inc. Research Head Joylin F. Telagen said in an e-mail.
Mr. Soledad said the market saw a 鈥渟ubstantial selloff鈥 before Wilcon鈥檚 reported its third-quarter earnings as investors braced for weak corporate financial results.
Despite Wilcon鈥檚 slightly better performance last week, it remained on a downtrend due to the shortened trading period, Ms.聽Telagen said.
鈥淚f there is surprise news that may improve the company鈥檚 performance and align to investors鈥 objectives, then trade,鈥 she said.
鈥淒ue to disappointed earnings and trading within the downtrend area, I think it鈥檚 better to set an alert. If it exits the downtrend channel with an attractive risk-reward ratio, then trade,鈥 Ms. Telagen added.
She placed Wilcon鈥檚 support and resistance levels at P19 and P22.25, respectively.
Meanwhile, China Bank Securities鈥 Mr. Soledad placed the stock鈥檚 support and resistance at P19 and P21.90, respectively.
鈥淲e think that the stock price recovery for [Wilcon] may be protracted for so long as… it continues to see elevated costs 鈥 especially as expansion-related expenses are likely to continue weighing on profitability 鈥 as it targets to continue growing its store network despite prevailing soft demand conditions,鈥 he said. 鈥 B.T.M. Gadon
