{"id":327643,"date":"2024-04-25T02:12:21","date_gmt":"2024-04-24T18:12:21","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327643"},"modified":"2024-04-25T02:12:23","modified_gmt":"2024-04-24T18:12:23","slug":"stock-in-focus-manila-water-co-mwc-25-apr-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-water-co-mwc-25-apr-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Manila Water Co. (MWC) – 25 Apr 2024 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>25 April 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 26.10<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We are raising our 2024 Target Price for MWC from P23.79 to P26.10 to reflect higher net income growth trajectory of almost 15% CAGR in the next 5 years. This forecast is underpinned by a higher-than-expected rate hike on top of stable billed volume growth for East Zone (EZ), sustained turnaround in Non-East Zone Philippines (NEZ-PH), increasing contributions from Non-East Zone International (NEZ-Intl) new businesses, and ROE improvements from rationalization of legacy portfolio investments.<\/p>\n\n\n\n

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

Thailand write-down hits MWC bottom line<\/h3>\n\n\n\n

MWC reported a 2023 net income of P5.6-Billion after the company recognized a P4.1-Billion impairment adjustment on its investment in EastWater (Thailand). Excluding this non-recurring line item from 2023 and non-recurring gains from 2022, net income would be up by 73.9% YoY at P9.6-Billion, in-line with our forecast of P9.7-Billion for 2023. <\/p>\n\n\n\n

This was achieved despite revenues for most business segments trailing our estimates as the company has put in place effective cost reduction measures that kept OPEX within manageable levels. <\/p>\n\n\n\n

Dividend declaration surpasses expectations<\/h3>\n\n\n\n

MWC declared a cash dividend of P1.129\/share with ex-date on March 15, 20.6% higher than the P0.936\/share that we expected for the period. This translated to a dividend yield of 5.8% based on the declaration date closing price of P19.44, ranking MWC among the top 10 highest yielding stocks for this dividend season.<\/p>\n\n\n\n

Higher tariffs to boost 2024 earnings<\/h3>\n\n\n\n

The MWSS approved on December 13, 2023 for MWC to hike its basic charge from P35.85\/m3 to P42.26\/m3. This P6.41\/m3 increase is higher than the P5.00\/m3 hike that we factored in when we initiated coverage of MWC, and on its own would translate to a 6.1% jump in our 2024 Net Income estimate.<\/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>