FREE Market Commentary: MWIDE-GMR Challenges Super Consortium’s NAIA Bid

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Market Issue or Event

MWIDE-GMR Challenges Super Consortium’s NAIA Bid

MWIDE and GMR Infrastructure submitted its unsolicited proposal to rehabilitate and expand the NAIA. MWIDE-GMR’s offer is valued at $3.0 billion (PHP 150.0 billion) as compared to the super consortium’s (AC, AEV, AGI, FDC, JGS, MPI, Asia Emerging Dragon) proposal valued at PHP 350.0 Bn. The big difference is that MWIDE-GMR does not plan to construct a third runway for NAIA; instead they will increase its capacity to 72.0 million passengers from the current 30.0 million. MWIDE-GMR’s technical partner with Mitre Group, while the super consortium enlisted the help of Changi Airport Group (Singapore).

 

Our Partner Broker’s View and Commentary

Competition for the NAIA rehabilitation will likely be tight, especially with the SM Group also proposing to build a P1.3 Tn airport in Sangley, Cavite, and with SMC also planning to put up a PHP 700.0 billion airport in Bulacan. The NAIA rehabilitation will likely take a back seat if ever the other unsolicited proposals are approved.

Notwithstanding, it will be a big boost for MWIDE (Consensus Target Price: PHP 20.70) if they will be able to bag this contract. The stock is trading at a 2018 P/E of 24.2x which is quite expensive for a construction firm. We like MWIDE, but investors should be buying this stock on weakness, or just buy on news if ever it will be awarded the project.

 

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AP Securities (formerly Angping & Associates Securities)
AP Securities (formerly Angping & Associates Securities)

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