Today I will be giving relative information on Megawide Construction Corporation. This is part of the series of posts I’ve done in the past as follows:
In this post you will learn the following:
- Positive outlook on Megawide both as a stock investment and as a company
- Megawide’s preferred shares offering – what it is and how it works
Disclaimer: Thank you to Megawide for partnering with me in this post and providing the research material. All opinions are 100% my own.
Positive Outlook: Megawide as a stock investment and as a company
Engineering excellence and innovation has been the bedrock of Megawide’s success and growth over the last 20 years. The company’s wide array of integrated Engineering, Procurement, and Construction (EPC) business is at the core of and the largest revenue contributor to its portfolio.
Despite its airport assets continuing to be affected by the restrictions imposed on domestic and international travel, Megawide received a consolidated revenue growth of 27% year-on-year during the first nine months of 2021. This is led by the 47% growth in its construction business. Meanwhile, the landport business delivered lease revenues of Php 414 million amid the reinstitution of community lockdowns and continued economic challenges.
Megawide’s current stock price plays at around Php 5-6/share. This is below its IPO price when it went public in 2011 on a pure construction play, receiving a revenue of Php 7.8B and an order book of less than Php 20B.
Now Megawide’s order book continues to remain healthy at Php 60.2B for the period and the company will keep on embarking on more ambitious and large-scale infrastructure projects under the government’s Build, Build, Build program.
It operates a 20-hectare industrial facility in Taytay, Rizal, which houses its main precast plant, other ancillary business, and a vast stockyard of finished, ready-to-installed products. The company also maintains mobile and strategic site-based batching and precast plants for large-scale projects.
The Company also continues to enhance the capacity of its ancillary EPC services, like cement batching, formworks, and construction equipment and logistics, to complement its state-of-the-art pre-cast technology.
And in terms of technical competency, Megawide’s share from the Malolos-Clark Railway Project (MCRP) joint venture allows them to gain even more experience in elevated railway system civil works.
These insights provide a promise of hope as we welcome the year of 2022. Megawide continues to be a compelling investment proposition.
Review on Megawide Preferred Shares Offering
Last year, Megawide issued its latest preferred shares offering. For those who don’t know, preferred shares are a special class of stocks that have features of a debt instrument. Thus, investing in preferred shares provides fixed dividend payments. You have a steady stream of dividends regardless of the company’s earnings.
Megawide’s Series 4 preferred shares (PSE:MWP4) issued in October will pay a quarterly dividend of 5.4% per annum. Although the rate is slightly lower than the Series 2B preferred, its holding period is shorter at 3.5 years. It has successfully raised Php 4 billion from the said preferred shares offering.
In November 2020, Megawide also successfully raised Php 4.4B from its series 2 preferred shares offering. It comprises two sub-series, Series 2A preferred (PSE:MWP2A) that pays quarterly dividend of 4.75% per annum and Series 2B preferred (PSE:MWP2B) at 5.75%.
Just like how bonds work you are bound on a holding period of 2.5 years for MWP2A and 5 years for MWP2B.
Megawide plans to use the funding from the preferred share offering to partially finance its long-term infrastructure projects in preparation for post-COVID economic recovery.
This includes expanding its Paranaque Integrated Terminal Exchange (PITX)-like developments, including an adjacent lot, which will hold a bus staging area and a commercial complex. It also plans to double its precast plant capacity in selected locations in the country to take advantage of the increased demand for prefabricated construction materials.
The company is also eyeing to put up the Cebu Integrated Transport Hub. They will do this as part of the existing Carbon Market redevelopment project that hopes to transform Carbon into a new public market, including construction, transport and ferry terminals.
Projects such as above will complement Megawide’s construction and engineering revenues in the near term, to be complemented with a stronger recurring income base for the future.
If you have an excess cash and want to prepare for mid-term goals like a wedding, down-payment for your dream house or car, etc. then you might want to check out Megawide shares or Preferred Shares, which are both listed in the stock market.
Lastly, Megawide’s sister company, Citicore Power, Inc., through its subsidiary Citicore Renewable Energy Corp. (CREC), is preparing for its Citicore Energy REIT (CREIT) IPO listing, the country’s first energy REIT, on February 17, 2022. CREIT received recently regulatory approvals from the Philippine Stock Exchange and the Securities and Exchange Commission.
Final Notes from SavingsPinay
I do hope you find this post helpful.
In summary I love Megawide’s vision the most, as it looks beyond what’s ahead. Megawide is all about Engineering a First-World Philippines and partnering with the government’s rail infrastructure build-up its part of its agenda to achieve its vision.
It is pursuing several organic projects aimed at increasing connectivity between key cities, using a hub and spoke model with PITX at the center. The company is also considering and evaluating other key locations that aim ultimately to connect the main business districts with second-tier cities to decongest the capital and promote countryside development.
This, together with its pivot to infrastructure in the construction segment and constant financial and operational efficiency enhancements in the airport business, will drive Megawide’s long-term shareholder value creation agenda.