{"id":328946,"date":"2024-08-14T01:13:03","date_gmt":"2024-08-13T17:13:03","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=328946"},"modified":"2024-08-14T01:13:05","modified_gmt":"2024-08-13T17:13:05","slug":"stock-in-focus-manila-water-co-mwc-14-aug-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-water-co-mwc-14-aug-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Manila Water Co. (MWC) – 14 Aug 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>14 Aug 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 26.10<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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MWC remains one of our favorite companies, mainly for its consistency in delivering results and for its relatively low regulatory risks despite operating in a heavily regulated space. However, since the company\u2019s 1st half (1H) 2024 numbers was only slightly ahead of our expectations, there is little reason to revise our forecasts and via transitivity, our Target Price (TP) of P26.10. Since MWC\u2019s last traded price of P26.25 is slightly above our TP, we maintain our HOLD rating on the company.<\/p>\n\n\n\n

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

Net income a slight beat on stronger NEZ-PH<\/h3>\n\n\n\n

MWC\u2019s earnings of P7.2-Billion for the 1st half (1H) 2024 reached 54.9% of our 2024 forecast, despite a slight miss on billed volumes in the core Manila East Zone (EZ) concession area. This slight weakness in EZ was offset by better-than-expected performance from MWC\u2019s Non-EZ businesses in the Philippines (NEZ-
PH), particularly Laguna and Boracay.<\/p>\n\n\n\n

EZ\u2019s slight miss<\/h3>\n\n\n\n

The EZ’s 2nd quarter (2Q) 2024 billed volume booked flat growth, while billed volume for 1H 2024 was up 1.7% at 263.4 mcm. This is slightly behind our 2024 forecast of 539.7 mcm billed volume for EZ. The company also reduced its cross-border sales with Maynilad in a conscious effort to ensure availability of water supply to its customers in the midst of El Ni\u00f1o. As a result, revenues for the period only reached 46.7% of our full-year forecast. The lower-than-expected revenues, coupled with an 8.8% uptick in costs from new facilities, resulted in the segment\u2019s net income of P6.0-Billion likewise trailing our 2024 forecast of P13.2-Billion.<\/p>\n\n\n\n

NEZ-PH beat offset EZ weakness<\/h3>\n\n\n\n

Billed volume in MWC\u2019s NEZ-PH segment reached 60.1 mcm, slightly behind our full-year expectation of 122.2 mcm. However, higher-than-expected realized tariffs for Laguna and Boracay resulted in revenues of 4.3-Billion, beating our full-year forecast of P7.7-Billion. Net income for the period reached P762-Million, 62.9% of our 2024 forecast of P1.2-Billion.<\/p>\n\n\n\n

International business flops<\/h3>\n\n\n\n

Continued weakness in MWC\u2019s business units in Thailand (which was partially written off last year) and Vietnam weighed heavily on its international portfolio. In particular, the company cited weaker revenues in both areas, as well as rising operating costs in Vietnam as one of the key negative drivers for the 64% drop in NEZ-INTL. This is obviously behind our expectations of 1.5% growth from MWC\u2019s international business.<\/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>