Manila Water Company Inc. (MWC) Stock Analysis
Manila Water Company, Inc. (MWC) was incorporated on January 6, 1997 to provide water, sewerage and sanitation, distribution services, pipeworks, and management services to residential, commercial and industrial customers.
MWC is a joint venture among Ayala Corporation (AC), United Utilities Pacific Holdings, BV and Mitsubishi Corporation until it became a subsidiary of AC in 2010.
MWC holds the exclusive right to provide water and used water services to the eastern size (east zone) of the franchise area of the Metropolitan Waterworks and Sewerage System (MWSS) pursuant to the concession agreement entered into between the Company and MWSS on February 21, 1997.
The Company’s concession was extended by another 15 years by MWSS and the Philippine Government from May 2022 to May 2037.
The east zone encompasses 23 cities and municipalities spanning a 1,400-square kilometer area that includes Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, most parts of Quezon City, portions of Manila as well as 14 towns of Rizal province.
The Company has three wholly-owned subsidiaries namely;
- Manila Water Philippine Ventures, Inc. (MWPV), which holds all investments in the domestic operating subsidiaries;
- Manila Water Asia-Pacific Pte. Ltd. (MWAP), which holds the international ventures of the Company;
- Manila Water Total Solutions Corporation, which handles the after-the-meter products and services.
Currently under MWPV are;
- LagunaAAA Water Corporation
- Boracay Island Water Company, Inc.
- Clark Water Corporation
- Manila Water Consortium, Inc.
- Cebu Manila Water Development, Inc.
Included under MWAP are two affiliated companies in Vietnam namely, Thu Duc Water B.O.O Corporation and Kenh Dong Water Supply Joint Stock Company, both supplying bulk treated water to Saigon Water Corporation under a take-or-pay arrangement.
Also under MWAP are Saigon Water Infrastructure Corporation, Cu Chi Water Supply Sewerage Company, Ltd., and Asia Water Network Solutions Joint Stock Company.
Sector Details:
- Sector: Industrial
- Subsector: Electricity, Energy, Power & Water
source: PSE Edge
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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 (2-14-2017 3Q2016)
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 (2-25-2017 3Q2016)
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 (2-25-2017 3Q2016)
Estimated Growth Rates
Estimated growth rates are calculated using exponential chart trend line formula.
Estimated Growth Rates (3Q2016)
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 (2-25-2017 3Q2016)
Valuations By Top Leading Brokers
- Stock in Focus: MWC (18 Jan 2017) by RCBC Securities
- Stock in Focus: MWC (17 May 2016) by Angping & Associates Securities
- Stock in Focus: MWC (4 Mar 2016) by Angping & Associates Securities
- Stock in Focus: MWC (23 Feb 2016) by Unicapital Securities
- Stock in Focus: MWC (15 Jan 2016) by Unicapital Securities
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how did you get po the Debt Book Value? Is it in the balance sheet?
Thanks po in advance!
May i ask how did you get the debt book value in computing the WACC?
Thanks po in advance!
Hi George, just add all the short and long-term debts.
Thank for such prompt reply.
May i ask again why are you using the projected growth grate on Revenue, EPS, etc, instead of the actual growth rate?
Also, how do you come up with your projected growth rate? Is it a safety margin from the actual growth rate?
I am trying to understand the fundamental side of our market and i find your blog very useful and very understandable for a newbie like me.
Thank you so much again for your help!
I use projected growth rate to smooth out the trend. You can calculate growth rates by plotting it in an excel chart and let excel do the calculations.
To make it easy for you, you can instead get the CAGR. Or get the y-o-y growth from all the periods and get the median of it. There are a lot of ways to estimate growth. It’s really up to the one doing the valuations.
Is it advisable to buy MWC Stocks now at P6.68 considering the government’s push to stop MWC concession?
If you think that the government’s push to stop the concession is an unjustified pessimism, then yes. So carefully ask that to yourself. But if you ask me, I’ll buy MPI though.☺️