When demand is soft, manufacturers usually have two choices: wait for volumes to recover or find ways to produce more efficiently.

Wellcall appears to be working on the both.

Management indicated that order momentum improved. The company is also testing a new production process that converts compounded rubber granules directly into finished hose products, potentially removing several intermediate production stages.

According to BIMB Securities, management estimates that for applicable products, this could potentially reduce raw material costs by 20–30%, labour costs by 10–15%, and overall production costs by as much as 40–50%.

The interesting part? The investment required is reportedly less than RM1 million, with commercialisation targeted by end-2026 subject to successful testing.

If it works, the benefit is not just cost savings. A leaner production process could help Wellcall protect margins during weaker demand and provide greater operating leverage when volumes eventually recover.

There is another longer-term angle too. Wellcall is exploring producing rubber compounds internally, which could reduce reliance on third-party suppliers, improve control over input costs and potentially open up new revenue opportunities from supplying rubber compounds or expanding into other rubber-based applications.

This comes while the core business remains relatively sticky. Industrial hoses typically have a 3–12 month replacement cycle, customer retention remains above 95%, and monthly shipments have held at around 100–110 containers despite the softer environment.

So while demand recovery remains something to watch, Wellcall is not simply sitting around waiting for the cycle to turn.

If the new process delivers what management expects, the next earnings lever could come from making every hose more efficiently.

Wellcall’s share price has been under pressure, declining 14% in 2025 and a further 18% in the first half of 2026. The stock is currently trading near the lower end of its 52-week range of RM1.10 – RM1.50.

At the recent closing price of RM1.13, KLSE Screener shows a dividend yield of 7.1% and a price-to-earnings ratio of 14.42x. Notably, Wellcall has continued to pay quarterly dividends throughout this period of share price weakness, a consistent capital return feature that many income-focused investors continue to watch closely.

The softer share price performance largely reflects ongoing global demand weakness for low and medium pressure industrial hoses, rather than any sudden deterioration unique to the company.

On a more constructive note, management is progressing a new production process that could streamline operations and support margins if successfully commercialised. Analysts from BIMB Securities and Berjaya Research have maintained their Neutral/Hold calls, citing near-term demand caution while still acknowledging the company’s operational strengths and dividend consistency.

In short, the current valuation offers an elevated yield of 7.1% with continued quarterly dividend payments, set against a backdrop of soft industry demand and ongoing operational improvements.

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Rain or Shine, Dividend Always on Time

Wellcall may not be the loudest stock in the market, but it continues to stand out for the things that matter: consistency, balance sheet strength and consistent shareholder returns with quarterly dividends.

For 1QFY26, the company maintained its quarterly dividend payout at 1.60 sen per share (117% of their PAT), even though their top and bottom line were impacted from a softer global demand.

This consistency is not new. Since its listing in 2006, Wellcall has built a solid record of shareholder returns, with cumulative dividends of around RM500 million, while also maintaining a debt-free position since FY2018.

At a share price of around RM1.24, the trailing dividend yield (including special dividend) remains attractive at 6.13%, comfortably ahead of many fixed deposit rates and not too far from EPF-type returns depending on entry price (dividend rate of 6.15% declared by EPF for 2025).

What makes Wellcall interesting is that the business is built on a fairly resilient foundation. The group manufactures industrial rubber hoses, exports to more than 70 countries, and generates around 90% of its sales from export markets.

The business also benefits from replacement demand, as industrial rubber hoses typically need to be replaced after around 3 to 12 months depending on usage. That creates recurring demand from customers across industries. On top of that, Wellcall has maintained customer retention above 95%, supported by product quality, customisation capability and reliable delivery.

Over the years, the company has stayed resilient through different market cycles, including the global financial crisis, Covid disruptions, forex volatility and weaker external demand. That staying power says a lot about the strength of its business model.