Fundamentals, dividend, and growth plans drive Maynilad post-IPO outlook

A DEFENSIVE business model, undemanding valuations, planned expansions, and an upcoming dividend are expected to shape investor interest in Maynilad Water Services, Inc., analysts said, even as the stock closed slightly below its initial public offering (IPO) price on debut.

“On a more long-term view, Maynilad should weather market downturns well due to the defensive nature of its business and its undemanding valuations,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message on Friday last week.

“I’m sure the market is already anticipating its first dividend declaration around March next year” he added.

For her part, COL Financial Group, Inc. Chief Equity Strategist April Lynn Lee-Tan said: “Longer term, catalysts for strong performance include direction of interest rates (down), direction of profits (up).”

Luis A. Limlingan, head of sales at Regina Capital Development Corp., said that since the IPO price was set more than a week before the listing date and the gross domestic product (GDP) came in below consensus, having a flat performance on its first trading day is actually good.

“Probably… infrastructure investment/capex (capital expenditures), new capacity, reduction in non-revenue water (NRW), wastewater and sewerage opportunities, etc.,” he said in a Viber message. These, he noted, will serve as key catalysts driving Maynilad’s share performance in the coming quarters.

“Judging by the market’s tepid response, investors seem inclined to wait for lower entry points before turning constructive on Maynilad,” DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said in a Viber message.

He said that while the company remains fundamentally solid, weak sentiment may continue to drag the stock below its IPO price in the near term.

“I don’t see any catalysts aside from the earnings report and potential Philippine Stock Exchange index (PSEi) inclusion. I have a downward bias for Maynilad’s share price in the coming months,” Mr. Tin added.

On Friday, Maynilad shares closed slightly lower on its first trading day by 0.13% or 2 centavos, after opening at P15 and reaching a low of P14.98. Around 100.81 million shares were traded, valued at P1.51 billion.

The IPO generated gross proceeds of P34.3 billion, which will be used for capex and general corporate purposes.

During a media briefing, Maynilad Chief Financial Officer Ricardo F. Delos Reyes said the IPO was oversubscribed by 2.7 times, with a diverse geographic investor base comprising 53.6% from Asia, 29.6% local investors, 14.7% from Europe, and 1% from the United States.

Maynilad President and Chief Executive Officer (CEO) Ramoncito S. Fernandez said the company’s expansion priorities focus on improving current customer services, extending wastewater and sanitation to existing clients, supporting ongoing reclamation projects, and offering services to neighboring local government units.

“Talking about expansion, I want to make clear that our priority continues to be improving the services to our customers inside the concession. The low-hanging fruit for us is to offer wastewater and sanitation services to our existing commercial and industrial customers,” he said.

“We still [also] consider a distinct advantage for Maynilad to offer our services to the adjacent local government units (LGUs) in the north and in the south. There are still, specifically, the adjacent cities near our — beside our borders, our boundaries, that are wanting our services. So that’s a possibility for us that we can offer to these LGUs that are wanting improved services.”

PSE President and CEO Ramon S. Monzon said Maynilad’s IPO attracted strong foreign investment, which “clearly, disproving the doomsayer’s claim of foreign investor disinterest in our market.”

Maynilad becomes the second and last company to list on the PSE this year and the largest since Monde Nissin Corp.’s P48.6-billion offering in 2021 with its IPO price.

Metro Pacific Investments Corp., which holds a majority stake in Maynilad, is one of three Philippine subsidiaries of First Pacific Co. Ltd., alongside Philex Mining Corp. and PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., holds an interest in ����ý through the Philippine Star Group, which it controls. — Alexandria Grace C. Magno