Over the past posts, I’ve provided relative information on Megawide Construction Stock. From its stock movement during initial public offering release to its present situation and the present and future plans of Megawide.
Today we’ll talk about the very reasons why you need to watch out for Megawide.
Disclaimer: Thank you Megawide for partnering with me in this post and providing the research material. All opinions are 100% my own.
I would also like to put a disclaimer first that I am not a licensed financial advisor. Please do not treat this post as investment advice but more of an added reading. This post is again created only to educate, inform, and discuss for as a financial advocate. As always, invest only what you are okay to lose. Investing, whichever shape or form, involves risks.
About Megawide Construction – Let’s review
Here’s a quick rundown on the important information you need to know about Megawide Construction:
- Megawide is the country’s leading infrastructure innovator with a portfolio consisting of a fully-integrated Engineering, Procurement, and Construction (EPC) capabilities, world-class Airport Operations, and pioneering Transport-Oriented Developments.
- From a mid-size construction firm in 1997, Megawide grew to the success that it is today. And in just 14 years, the company was able to successfully list in the Philippine Stock Exchange.
- Megawide entered the market at Php 7.84/share and has evolved from a pure engineering and construction company to play a big role in revolutionizing the country’s infrastructure landscape, including the globally-acclaimed Mactan-Cebu International Airport (MCIA) and the first-of-its-kind Paranaque Integrated Terminal Exchange (PITX).
Megawide’s Order Book as of September 2021
Engineering excellence and innovation has been the bedrock of Megawide’s success and growth over the last 20 years. The Company’s EPC business is at the core of and the largest revenue contributor to its portfolio and serves as an enabler into higher value-added products and services.
During the first nine months of 2021, consolidated revenues grew 27% year-on-year, led by the 47% growth in its construction business, despite its airport assets continuing to be affected by domestic and international travel restrictions. Meanwhile, its landport business delivered lease revenues of P414 million amid the reinstitution of community lockdowns and continued economic challenges.
Megawide’s order book continue to remain healthy at P60.2 billion for the period and the company continues to embark on more ambitious and large-scale infrastructure projects, anchored on one of the largest and most advanced precast facilities in Southeast Asia and lately complemented by German concrete mixing technology that aims to lower raw material costs by 10% and carbon emission by 20-30%.
The company expects revenues to be driven by big ticket contracts, such as Andrew Tan’s gambling resort Suncity Westside City in Parañaque and its share from the Malolos-Clark Railway Project (MCRP) joint venture, among others. Another project in progress is the Manila Water’s Aglipay Sewage Treatment Plant (STP) together with contractor SUEZ. Megawide and SUEZ are responsible for designing and building the STP, which has a daily treatment capacity of 60,000 cubic meters serving Mandaluyong and southern San Juan and benefitting some 650,000 residents.
Megawide also participated in the Japan International Cooperation Agency (JICA)-funded Metro Manila Subway Project and the Asian Development Bank (ADB)-financed North-South Commuter Railway (NSCR) South Line projects bidding to boost its horizontal infrastructure portfolio. It also plans to submit a proposal for the electromechanical and track works package of the Malolos-Clark and Solis-Calamba stretches of the North South Commuter Rail project.
For the precast space, Megawide secured the design, supply, and build contract for 350 housing units for niche market property developer Johndorf Ventures Corp.’s Coral Village Project in Cebu. This deal will utilize precast technology, found to be a more convenient, economical, and efficient way to construct mass horizontal development versus traditional methods.
Lastly, the company signed its 6th and 7th projects with PhirstPark Homes in Magalang, Pampanga and Batulao, Batangas to cover more than 2,000 housing units and bring the total deliverable units to 12,000.
What to Watch Out for on Megawide
Megawide’s valuation remains compelling amid the impact of the pandemic.
In 2011, the company went on initial public offering (IPO) stage on a pure construction play with revenues of Php 7.8 billion and order book of less than Php 20 billion. Today, Megawide’s latest order book of Php 60.2 billion is more than 3x its IPO level, with significant upside once bids for big ticket projects are successfully awarded. It is also important to note that construction revenues are forecasted to reach at least Php 15 billion this year, double what it was when it was listed 10 years ago.
In terms of stock performance, MWIDE’s price hovers around P6/share level and is even below its IPO mark. With the essentiality and bright prospects of its construction and transport-oriented developments, there definitely is significant value hidden in Megawide stocks.
Moreover, the increasing pace of vaccination, the easing of interisland mobility and the upcoming national elections are expected to serve as catalysts to boost domestic travel. This is good news as Megawide’s subsidiary GMR-Megawide Cebu Airport Corporation, which has been brilliantly and legitimately operating the Mactan-Cebu International Airport (MCIA) for the past six years, predominantly caters to 70-80% domestic travellers.
And because of its outstanding track record in infrastructure, Megawide was voted the Most Outstanding Company in the Philippines for the Construction and Engineering Sector in Asiamoney’s recently concluded Outstanding Companies Poll for 2021. Megawide was also voted as the Most Innovative Company of the Year in the 11th Asia CEO Awards and nominated as one of the finalists in IR Magazine’s South East Asia Awards for the Industrials Category.
Final Notes from SavingsPinay
I said this before and I say it again, infrastructure can create a multiplier effect in the economy. And Megawide, as young as it is, is already a legend in the field. As the company secures new contracts, the construction segment will only continue to drive even more revenues.
In every aspect we can see that Megawide seeks to contribute to the country’s economic growth and advancement. The construction industry is one of the underrated sectors during this pandemic. For long term investors this means a great way to diversify your portfolio. There’s a huge potential in this market for the future.
Investing is one sure way you can build a strong financial foundation and enable yourself to earn passive income. But, of course, make sure you have enough savings first and you understand the risks before doing so.
I hope this post helps you.