MPIC shares climb as earnings results outweigh uncertainties

By Jobo E. Hernandez
Researcher

INVESTORS continued to take positions on Metro Pacific Investments Corp. (MPIC) stock last week following the release of the company’s annual earnings results late last month.

Data from the Philippine Stock Exchange showed a total of P1.26 billion worth of 364.40 million MPIC shares exchanged hands at the trading floor from March 2 to 6.

Shares in the Pangilinan-led holding company closed on Friday at P3.62, up by 17.9% from P3.07 a week ago. Year to date, the stock’s price has risen by 7.7%.

“The rally can be attributed to its sound 2019 financial results driven by its power, toll operations, and hospital segment. The attractive valuations also made [MPIC] a good candidate for bargain hunting this week. In fact, the company itself has already stepped in the market through its share buy-back program in light of the view that its share is already too undervalued,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in an e-mail.

“With the NAIA (Ninoy Aquino International Airport) rehabilitation deal, there are still uncertainties stemming from some disagreements between the consortium and the government. Nonetheless, these uncertainties have been placed on the sidelines for the meantime in favor of the positive factors aforementioned that drove [MPIC’s] share price up,” he added.

Mr. Tantiangco was referring to the news regarding the government’s reservations over portions of the concession agreement drafted by the “super consortium” that is proposing to rehabilitate NAIA, such as the use of a bus rapid transit system to transport passengers within the airport complex and the job security of workers of the Manila International Airport Authority, the government agency responsible for the management of NAIA.

To recall, the National Economic and Development Authority Board approved in November last year the unsolicited P102-billion proposal from a consortium to rehabilitate NAIA. This consortium is comprised of MPIC, Aboitiz InfraCapital, Inc.; AC Infrastructure Holdings Corp.; Alliance Global Group, Inc.; Asia’s Emerging Dragon Corp.; Filinvest Development Corp.; and JG Summit Holdings, Inc.

Once the concerns are settled and negotiations are concluded, the rehabilitation project will be subject to a Swiss challenge, wherein third-party companies are invited to submit counterproposals, with the original proponent being given the right to match.

The rehabilitation of the NAIA, whose main terminal opened in 1981, is expected to increase its capacity to 47 million passengers a year in the first two years and further expand this to 65 million passengers after four years.

In a separate e-mail, Mercantile Securities, Inc. Analyst Jeff Radley C. See noted MPIC “bottomed out” following the company’s announcement of the P5-billion buyback program. “Aside from that, they partnered with the Dusit International group to push their hospitality arm,” he said.

MPIC announced last month that its board of directors approved doing a three-month share buyback program of up to P5 billion until May 26 in order to “enhance and improve shareholder value and to manifest confidence in the company’s value and prospects through the repurchase of its common shares.”

Moreover, MPIC signed a P1.6-billion investment deal with Dusit last month for the joint development and management of hotels and condominiums in the Philippines. The partnership will commence this year with the development of two hotels and three condominiums in MPIC’s properties in Batangas, as well as the upgrade of Dusit’s existing properties in the country.

MPIC reported 69% growth in its attributable net income to P23.9 billion in 2019 from P14.13 billion in 2018. It also posted a core net income of P15.6 billion in 2019, up 4% from a year ago.

The holding company posted gains in its businesses in power (which make up 55% of its net operating income last year, or P11.6 billion), tollroads (25%, P5.2 billion), water (17%, P3.6 billion), and hospitals (4%, P867 million). On the other hand, other businesses such as rail and logistics posted a combined net loss of P352 million.

“[N]et income could decline for 2020 as it normalizes after its 69% spike in 2019 brought by nonrecurring earnings. Nonetheless, core net income could still climb higher marginally, still driven primarily by its power and toll operations segment,” Philstocks’ Mr. Tantiangco said, adding that this could change if the effect of the coronavirus disease outbreak worsens as it would adversely affect the company’s operations.

Mr. Tantiangco placed the MPIC stock’s support and resistance levels at P2.90-P3.00 and P3.80-P3.90, respectively.

For Mercantile Securities’ Mr. See: “[MPIC] support levels are P3.40 and P3.00 while resistance levels are P3.80 and P4.20.”

MPIC is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in ����ý through the Philippine Star Group.