Metro Pacific Investments Corporation (MPI) Stock Analysis

Metro Pacific Investments Corporation (MPI) was incorporated on March 20, 2006 as an investment holding company. The Company is organized into the following segments based on services and products:

water utilities
toll operations
power distribution
healthcare
rail
real estate
provision of services

In 2013, MPI made its offshore investment, through its wholly owned subsidiary MPIC Infrastructure Holdings Limited (MIHL), by acquiring a 25% ownership in FPM Infrastructure Holdings Limited (FPM Infra), which holds a 29.45% stake in a Thai toll road operator, Don Muang Tollways Public Ltd. In 2014, MPI acquired, through MIHL, from First Pacific Company Limited the remaining 75% ownership in FPM Infra.

MPI, through subsidiary Metro Pacific Tollways Corporation, further expanded its regional footprint through a 45% effective interest in CII Bridges and Roads Investment Joint Stock Co., a toll road company located in Ho Chi Minh City in Vietnam with about 123 kilometers of toll road and bridges in total.

The Company’s subsidiaries are:

Maynilad Water Holding Company, Inc.
Metro Pacific Light Rail Corp.
MetroPac Water Investments Corporation
Metro Pacific Hospital Holdings, Inc.
MPIC-JGS Airport Holdings, Inc.
Porrovia Corporation; Fragrant Cedar Holdings, Inc.
Neo Oracle Holdings, Inc.; Metro Global Green Waste, Inc.
MetroPac Logistics Company, Inc.

On May 30, 2016, MPI and PLDT Communications and Energy Ventures, Inc. (PCEV) entered into a sale and purchase agreement for MPI to acquire a further 25% interest in Beacon Electric Asset Holdings (BEAH), which owns 35% of Manila Electric Company (MER) and 56% of Global Business Power Corporation (GBPC).

Upon completion, MPI will continue to own a direct 15% interest in MER and, through its 75% interest in BEAH, a further 26.2% – thereby taking its effective ownership interest in MER to 41.2% and in GBPC to 42% directly and about 9.1% indirectly through MER. PCEV’s interest in MER will be reduced to an effective interest of 8.7%.

Sector Details:

Sector: Holding Firms
Subsector: Holding Firms

source: PSE Edge

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Value Screen Scorecard

Piotroski F-Score

Altman Z-Score

Estimated Growth Rates

Intrinsic Value Calculations

Valuations By Top Leading Brokers

Value Screen Scorecard

Stocks are scored based on Profitability & Growth, Financial Health, Quality, Dividends and Valuation. Each criterion in the list is scored based on financial data for a total of 100 points. Stocks are ranked from 1 to 5, 1 being the highest.

Read this post to get more information on how the value scorecard works.

Scoring Criteria:

Rank # 1: Extremely good company
Rank # 2: Good company
Rank # 3: Average company
Rank # 4: Needs further study and research to identify the company's weaknesses
Rank # 5: Risky company

Value Scorecard (1-24-2017 3Q2016)

Criteria	Values	Score
Criteria # 1: Market capitalization	201,286,800,000	1
Criteria # 2: Profit margins (5-yr. Average) Gross profit margin Operating profit margin Net profit margin	61.11% 47.24% 25.85%	8
Criteria # 3: Net income consistently growing for the last 5 years		2
Criteria # 4: Revenue consistently growing for the last 5 years		2
Criteria #5: Cash & equivalents consistently growing for the past 5 years		1
Criteria # 6: Operating cash flow consistently growing for the past 5 years		1
Criteria # 7: Earnings per share consistently growing for the past 5 years		2
Criteria # 8: 5-yr. EPS growth rate	10.30%	2
Criteria # 9: Return on equity 3-yr. average 5-yr. average Previous year's ROE YoY growth	8.31% 8.24% 6.62%	1
Criteria # 10: Return on invested capital 5-yr. average	7.03%	0
TOTAL POINTS		20/30

Criteria	Values	Score
Criteria # 1: Debt settlement capacity Free cash flow Long-term debt Current ratio D/E ratio Interest coverage ratio Working capital to total debt ratio	20,588,000,000 90,611,000,000 1.99 0.06 4.10 1.73	3
Criteria # 2: Cash to current assets Current Recent	0.64 0.58	-1
Criteria # 3: Inventory to current assets Current Recent	N/A N/A	4
Criteria # 4: Accounts receivable to current assets Current Recent	0.14 0.18	4
Criteria # 5: Accounts payable to current assets Current Recent	0.45 0.42	2
TOTAL POINTS		12/25

Criteria	Values	Score
Criteria # 1: Piotroski F-Score	6	6
Criteria # 2: Altman Z-Score	1.20	0
TOTAL POINTS		6/20

Criteria	Values	Score
Criteria # 1: Dividend payout ratio	23.68%	5
Criteria # 2: Dividend yield	1.30%	2
TOTAL POINTS		7/10

Criteria	Values	Score
Criteria # 1: PEGY ratio	1.56	0
TOTAL POINTS		0/15

Stock Rating	Score
Final Score	45/100
Stock Ranking	3

Piotroski F-Score

The Piotroski F-Score is a financial metric model that's helpful in spotting turnaround businesses. For more information, you may read about it here.

Scoring Criteria:

7 to 9 points: Wonderful business
5 to 6 points: Average business
1 to 4 points: Weak business

Piotroski F-Score (1-24-2017 3Q2016)

Piotroski F-Score	Values
Profitability:
1: Net income 2: Operating cash flow 3: Return on assets 4: Quality of earnings	1 1 0 1
Leverage:
5: Long-term debt vs. assets 6: Current ratio 7: Shares outstanding	1 1 0
Operating efficiency:
8: Gross margin 9: Asset turnover	0 1
Piotroski F-Score	6

Altman Z-Score

The Altman Z-Score is a bankruptcy prediction model that's helpful in spotting low quality companies. More information about it can be found in this post here.

Scoring Criteria:

Z > 2.99; “SAFE” Zone (Healthy business)
Z < 1.81; “DISTRESS” Zone (Troubled business)
1.81 > Z > 2.99; “GREY” Zone (Warrants more investigation)

Altman Z-Score (1-24-2017 3Q2016)

Altman Z-Score	Values
X1 (Working capital / Total assets)	0.0225
X2 (Retained earnings / Total assets)	0.1225
X3 (EBIT / Total assets)	0.0571
X4 (Market capitalization / Total liabilities)	1.0443
X5 (Revenue / Total assets)	0.1269
Altman Z-Score	1.20

Estimated Growth Rates

Estimated growth rates are calculated using exponential chart trend line formula.

Estimated Growth Rates (3Q2016)

Growth Rate	3-yr. (%)	5-yr. (%)
Revenue	11.19%	12.43%
Net income	15.13%	15.10%
Earnings per share	10.41%	10.30%
Operating cash flow	7.79%	5.20%

Intrinsic Value Calculations

The figures and all other variables used in order to get the intrinsic value are listed in detail below for reference purposes so that cross-checking can be made to verify the values obtained.

Intrinsic Value Calculations (1-24-2017 3Q2016)

WACC Variables	Values
Risk free rate Stock beta Market risk premium Cost of equity (Re)	4.321% 0.96 8.10% 12.10%
Shares Price Market value of equity	29,172,000,000 6.90 201,286,800,000
Interest rate Tax rate Cost of debt (Rd)	5.06% 17.38% 4.18%
Debt book value Adjustment Market value of debt	94,168,000,000 1.20 113,001,600,000
Total capital Weighted average cost of capital (WACC)	314,288,400,000 9.25%

DCF Variables	Values
Free cash flow	20,588,000,000
Projected growth rate	12.43%
Shares outstanding (diluted)	29,172,000,000
Discount rate (WACC)	9.25%
Perpetuity growth rate	2.60%
Margin of safety	25%
Intrinsic value per share	8.42
Adjusted intrinsic value per share	6.31

P/E Valuation Model Variables	Values
Input data:
Earnings per share (TTM) P/E ratio (TTM) Growth rate Discount rate	0.38 18.16 10.30% 9.25%
Calculations:
Year	EPS x Growth
1 2 3 4 5 6 7 8 9 10	0.38 0.42 0.46 0.51 0.56 0.62 0.68 0.75 0.83 0.92
Value in 10 years	16.67
Margin of safety	25%
Intrinsic value	6.88
Adjusted intrinsic value	5.16

Valuations By Top Leading Brokers

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Metro Pacific Investments Corporation (MPI) Stock Analysis

Value Screen Scorecard

Scoring Criteria:

Value Scorecard (1-24-2017 3Q2016)

Profitability & Growth

Financial Health

Quality

Dividend Assessment

Valuation

Final Score & Ranking

Final Score

45/100

Stock Ranking

3

Piotroski F-Score

Scoring Criteria:

Piotroski F-Score (1-24-2017 3Q2016)

Altman Z-Score

Scoring Criteria:

Altman Z-Score (1-24-2017 3Q2016)

Estimated Growth Rates

Estimated Growth Rates (3Q2016)

Intrinsic Value Calculations

Intrinsic Value Calculations (1-24-2017 3Q2016)

Weighted Average Cost Of Capital (WACC) Calculations

Discounted Cash Flow (DCF) Calculations

P/E Valuation Model

Valuations By Top Leading Brokers

We love to hear your thoughts! Share them on the comments section below. Happy investing!

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