By Jochebed B. Gonzales
Senior Researcher
SHARES of Megawide Construction Corp. continued seeing demand last week as the company carries out its P2-billion buyback program, which according to traders, boosted investor confidence on the stock.
A total of 27.43 million Megawide shares worth P477.62 million were traded at the exchange last week from Oct. 22-26, data from the Philippine Stock Exchange showed.
Megawide shares closed at P17.58 apiece on Friday, up 3.5% week on week. Year to date, they were down by 1.8% from the Jan. 3 closing price of P17.90.
“The company is accumulating its shares. If you notice, the price of MWIDE (Megawide’s ticker symbol) shares came from a low of P14.02 each early this month to where it is now, at the P17-level,” said Jeng T. Calma, trader at A&A Securities, Inc., as she attributed the rise in the company’s stock price to the buyback.
“From an investor’s point of view, the buyback means the company is supporting its stock. That gives confidence to the investor,” Ms. Calma added.
“The buyback is a huge boost to investor confidence,” UPCC Securities Corp. equities trader Aristotle D. Reyes, Jr. said in agreement.
“The primary reason for the buyback is that the price is already cheap and the company wants to make the most out of it, but it also shows the company’s concern for investors and its stock price,” he said, noting the buyback helps stabilize the price of Megawide shares amid a sell-off sentiment in the listed market.
In its latest disclosure, Megawide said it bought back 20.39 million shares at P16.76 apiece on Oct. 23. The company has appropriated P2 billion for its buyback program.
Fundamentally, Mr. Reyes noted that apart from the usual construction business, new recurring revenue streams were added to Megawide’s portfolio such the operations and maintenance of government projects.
“This gives MWIDE steady income along the way, unlike construction business income which is volatile and cyclical,” he said.
Last July, GMR-Megawide Cebu Airport Corp. — a joint-venture between Bangalore-based GMR Infrastructure Ltd. and Megawide — opened a second terminal at the Mactan Cebu International Airport, which caters solely to international flight carriers.
Meanwhile, the Parañaque Integrated Terminal Exchange (PITX) — operated by MWM Terminals, Inc., a consortium between Megawide and WM Property Management, Inc. — is scheduled for inauguration on Nov. 5.
The country’s first “landport” is expected to improve passenger movement between Metro Manila and Cavite by connecting buses, taxis, jeepneys, and in the future, the Light Rail Transit Line 1 (LRT-1) South Extension, in one portal.
“Right now investors are thinking what’s next for MWIDE… [Although] we need to see first the performance of PITX,” said UPCC Securities’ Mr. Reyes. “But since it’s a government project, most likely it will give huge income.”
He also said trading volume at the exchange was weak due to lack of catalysts. Still, there’s demand for Megawide, Mr. Reyes said.
“For MWIDE, it’s quite healthy. There’s net foreign buying for [four] consecutive days. Maybe because of the PITX opening, they’re speculating it’s a very good addition to the company.”
Mr. Reyes pegged Megawide’s support and resistance at P17 and P18, respectively.
A&A Securities Ms. Calma gave Megawide’s support at P16 and resistance, at P18.
