{"id":324490,"date":"2023-08-17T00:44:54","date_gmt":"2023-08-16T16:44:54","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324490"},"modified":"2023-08-17T00:44:55","modified_gmt":"2023-08-16T16:44:55","slug":"stock-in-focus-manila-water-co-mwc-17-aug-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-water-co-mwc-17-aug-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Manila Water Co. (MWC) – 17 Aug 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>MWC<\/td><\/tr>
Company Name<\/strong><\/td>Manila Water Company Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>17 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 24.70<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We reinstate our BUY rating on MWC from HOLD, based on consensus Target Price of P24.70 per share.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Earnings outperform on higher tariff rates<\/strong><\/p>\n\n\n\n

Operating revenues in Manila Water Co.\u2019s (MWC) main East Zone concession area for the first half jumped 46% to P12.0-Billion as the 6% rise in billed volume was boosted by a 36% increase in average tariff rates from P32.20 to P43.90. Coupled with strong 30% growth in revenues from the company\u2019s other franchise areas outside of Metro Manila and effective cost management despite headwinds, MWC ended the quarter strong with a net income of P2.86-Billion. This exceeded forecasts by 21% and represents 68.5% of full-year estimates.<\/p>\n\n\n\n

Cross-border billing with Maynilad slows to a trickle<\/strong><\/p>\n\n\n\n

Cross-border billing in 1Q 2023 gave a significant boost to MWC, reaching P390.8-Million and making up 5% of consolidated revenues for that quarter. This dropped P70.5-Million in 2Q 2023, as MWC prioritizes supply to its own concession area during the lean summer months. The trend is expected to continue if we start feeling the effects of El Ni\u00f1o later this year.<\/p>\n\n\n\n

Improvements to ratios<\/strong><\/p>\n\n\n\n

We have previously expressed concern over MWC\u2019s gearing ratio and low return on equity. We are starting to see improvements in the company\u2019s net-debt-to-EBITDA, which will likely ease to 4.3x by the end of 2023 from 5.95x at the end of 2022. Return on equity also showed a marked improvement to 13% from 9% in 2022.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>