For those who are new to this Stocks By Request series, this is the top stocks that you have requested via social media and my website. Just keep on sending your requests and we will analyze the top stocks! For this edition we have both Jollibee and Vitarich. Infrastructure group Megawide Construction Corp. (MWIDE) bagged an 8% profit growth for the first quarter this year amounting to P475.29 million, the growth was due to the good performance of its Cebu airport operations. The report of its total revenue, however, was a little disappointing since it fell by 6.67% amounting to P4.45 billion followed by the slowdown of its contract revenue this period.
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MWIDE’s construction business comprises 84% of its total revenues which has been declining 11% year-on-year. The company explained that this decline was attributable to the cyclical nature of the construction business. The 16% came from its airport segment which was up 13% year-on-year. The growth from its airport segment was due to an increase of passenger volume in its international arrivals and domestic passengers by 14% and 10%, respectively. This resulted to a 37% increase in its net income.
The addition of new airlines, international flights to Busan and Guangzhou and domestic routes to Ormoc and Catbalogan benefitted the company as the Mactan-Cebu International Airport (MCIA) reported that it was able to handle 2.7 million passengers to which 65% was from domestic and 35% from international arrivals.
This quarter, the company has been able to book new projects to work on. In fact, it was able to secure P13.3 billion worth of new contracts which is 124% higher than the number of contracts secured in 2017. Some of the projects include 8990 Holdings, Inc’s Ortigas Extension project, DoubleDragon Properties Corp.’s Ascott-DD Meridian Park and Double Dragon Tower Phase 3, Gateway Mall 2 Hotel, Golden Bay Tower, Taft East Gate, Space Ubelt, and also the construction of the Clark International Airport’s expansion.
With a strong growing economy and promotion of its tourism industry, the Philippine’s is one of the top performing economies in Southeast Asia and this means that our country is attractive to investors which will contribute more to for a better market performance. One good aspect that the company can look forward to, is the government’s Build, Build, Build program which aims to focus on infrastructure spending. The company’s services and competitiveness will play a big part as it is a Quadruple A contractor, a concession operator and a fully-integrated engineering company. This means that they have the competitive advantage against its competitors hence they can easily participate in contracts.
The company’s CEO expressed that the solid performance from its airport segment will be strengthened by the completion of the airport’s Terminal 2 this coming June. Also, GMR Megawide Cebu Airport Corp. (GMCAC) won the contract for the MCIA Passenger Terminal Building project with will develop MCIA under the concession period of 25 years. GMCAC is set to start commissioning new passengers of its terminal this June 22.
With the current administration focused on infrastructure spending, the construction industry will flourish more from its expected growth. The P1-trillion budget will contribute to current market forecasts of the construction and infrastructure sector as this will encourage more investments here in the country. The construction industry is seen to grow to 9.8% annually from 2017 to 2026.
The stock just broke out from the 21.65 level. Due to that upward movement the next target price is set at 24. As the stock continues to move up sell as close as you can to 24 if the stock fails to break that resistance. If Megawide breaks past 24, the next target price is at 26.35.