Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

Wajax Corp (TSX: WJX) is a Canadian distributor of industrial components. The company's core business is the sale of parts and service support of equipment, power systems, and industrial components through a network of branches in Canada. Most of its revenue is generated from the sale of equipment which includes machinery and components used for construction purposes and its industrial components find utility in businesses like mining, forestry, and material handling for other industrial purposes. Kalkine’s Resource Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~9.44% of the total shareholding. Dimensional Fund Advisors, L.P. and Jarislowsky Fraser, Ltd. hold a maximum stake in the company at ~­­­2.25 and ~1.35%, respectively.

1.4 Key Metrics:

The company reported healthy growth in its key financials, with revenue increasing by approximately 19.9% in FY 2022 versus FY 2021, and net earnings increased by approximately 36.1% in the same period, which is a significant positive. Revenue for the company's both operating segments increased in FY2022 compared to the previous corresponding period. Furthermore, the group also clocked improving debt to equity ratio and healthy backlog demonstrates the group's strength and adaptability.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of its recent activities, such as an announcement regarding an increase in dividend distribution.

2.2 Insights on FY 2022 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed a downside of ~1.07% in 1 month and an upside of ~11.03% over the last 3 months. Moreover, the stock is trading above the average of 52-week high price of CAD 25.70 and 52-week low price of CAD 17.25 providing an opportunity to ride the trend. Wajax Corp (TSX: WJX) was last covered in a report dated ‘24th February 2023’.

4.2 Fundamental Valuation

Valuation Methodology: EV to EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is April 20, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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Disclaimer

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