Water utility firms to sustain growth this year — analysts
WATER UTILITY companies are expected to sustain growth this year due to increased demand, but regulatory decisions may pose challenges, according to analysts.
“Water companies in the Philippines may continue to experience steady revenue growth driven by increasing demand for water services due to population growth, urbanization, and industrial expansion,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
The increase in water demand may translate to higher revenues for water companies, he said.
He said that most of them will likely prioritize service improvement, which includes upgrading infrastructure, reducing nonrevenue water, and improving customer service.
“Water utilities like power generating companies remain a dependable investment given the almost never ending for expansion and service improvement,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
For his part, Seedbox Securities, Inc. Equity Trader Jayniel Carl S. Manuel said that water companies are expected to achieve “better financial performance” in 2024.
This would likely be driven by their “strategic presence in urban areas, where competition is scarce,” he added.
“Government backing further cements their market position, while expansion into rural regions offers lucrative growth avenues, outpacing smaller providers,” Mr. Manuel said. “Investments in technology and infrastructure promise heightened operational efficiency and enhanced customer satisfaction.”
Amid expected momentum, analysts said that water companies may face challenges, particularly regarding regulatory decisions and environmental sustainability.
“Regulatory decisions regarding tariff adjustments will play a crucial role in determining profitability,” Mr. Arce said.
“Profit margins may remain relatively stable, although they could face pressures from rising operational costs, such as energy expenses and infrastructure maintenance,” he added.