Better-than-expected profit boosts Metro Pacific’s share price

BETTER-THAN-EXPECTED earnings and renewed investor interest made the Metro Pacific Investments Corp. (MPIC) stock one of the most actively traded last week.

Data from the Philippine Stock Exchange showed that MPIC was the eighth most traded stock with a total of P881.31 million worth of 179.48 million shares having exchanged hands on the trading floor from March 4 to March 8.

Shares in MPIC closed at P4.92 apiece on Friday, down 1.2% from the previous day and up 7.7% on a week-on-week basis. For the year, the company’s shares were up by 6.7%.

In an e-mail interview, Unicapital Securities, Inc. Research Head Wendy Estacio ascribed the stock’s price movement to “better-than-expected earnings” driven by MPI’s power and toll road businesses.

“Investor interest in the stock was boosted by a recent grant of its petition to increase toll fees, particularly as it happens ahead of next month’s travelfrenzied Holy Week break,” Philstocks Research Head Justino B. Calaycay, Jr. said in an e-mail.

Last Wednesday, NLEX Corp. said it received the Toll Regulatory Board (TRB) go signal to collect P10 in additional toll fees in its open system or the fixed rate for vehicles traveling within Quezon City, Caloocan City, Valenzuela City, Malabon, Meycauayan and Marilao. The company was also allowed to collect an additional P0.18 per kilometer in its closed system, or the rates which are based on distance traveled. The higher toll rates will take effect on March 20.

In an e-mail, Luis A. Limlingan, managing director at Regina Capital Development Corp., noted of MPIC hospital unit’s plans to raise up to P20 billion in capital by late this year or early next year.

Metro Pacific Hospital Holdings, Inc. (MPHHI) is looking to raise P15-20 billion in fresh capital in the next two years to support its plan of having

30 to 40 hospitals in the future. In a press briefing last Tuesday, MPIC Chief Finance Officer David J. Nicol said the parent company is evaluating whether MPHHI should pursue an initial public offering or private placement to secure the funds.

MPHHI currently has 14 hospitals offering about 3,200 beds under its network. The company targets to further increase this network to 5,000 beds.

Meanwhile, MPIC reported its net income attributable to parent rose 7% to P14.1 billion last year compared to P13.2 billion in 2017. The company also noted its core net income of P15.1 billion in 2018, 7% higher than the P14.1 billion it posted in 2017 on account of a 10% increase in operating income.

Its power business contributed P10.8 billion, or 55% of net operating income, followed by those in toll roads (P4.4 billion); water (P3.8 billion); and hospitals (P771 million). On the other hand, its rail, logistics, and systems group reported a P248-million net loss during the period.

“We see consistent growth for the company as its businesses continue to be profitable. Such businesses are in essential industries such as water utility, electricity, toll roads, and hospitals. To an extent, these are inflation-resistant sectors as it delivers on basic necessities,” said Philstocks’ Mr. Calaycay.

Mr. Calaycay also noted MPIC’s toll roads business as a “consistent contributor” to the company’s top line and that the increase in toll fees “should push the year-on-year numbers from second quarter going forward.”

“[MPIC] is also continuing to be aggressive in investing in its healthcare business as it gears up towards its goal of 30-40 units over the next two years,” he added.

Moving forward, Unicapital’s Ms. Estacio noted MPIC’s growth drivers to remain in its power and toll road segments. “We are bullish on the group as utilities sector remains defensive,” she said.

Ms. Estacio forecasts MPIC’s revenue and net income to grow by 7% and 3% this year, respectively.

She placed the company’s support level at P4.50 per share and resistance level at P5.18 per share. “The trend is still consolidation phase and will be bullish if it stays above P5.00 per share in the short term,” she said.

For Philstocks’ Mr. Calaycay, the stock price “continues to be capped within the P5-P5.10 range.”

“If volumes are sufficient to support a break past this range, we could see the stock pushing towards a recent peak at P5.15, and onto P5.30,” he said.

“Given current market conditions however, and with its 2018 numbers posting but incremental gains, investors will require more impetus to propel the shares towards those points. As the euphoria over the rate adjustment in toll fees fade, share price may tend to continue consolidating just below the P5.00 [per share] mark.”

Regina Capital’s Mr. Limlingan pegged MPIC’s support and resistance levels at P4.80 per share and P5 per share, respectively.

MPIC is one of three Philippine units of Hong Kong-based 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 interest in through the Philippine Star Group, which it controls. —