Manila Water up due to positive sector sentiment

By Lourdes O. Pilar, Senior Researcher

MANILA Water Co., Inc. was among the most actively traded stocks last week amid optimism in the water utility sector and the company’s continued network expansion.

The Razon-led water concessionaire was the 10th most traded stock from Oct. 27 to 30, with 12.83 million shares worth P439.12 million changing hands, according to data from the Philippine Stock Exchange (PSE). The trading week ended early in observance of All Saints’ Day.

Manila Water closed the week at P34.75 per share, up 5% from a week earlier. The company’s stock outperformed both the industrial sector, which inched up 0.01%, and the benchmark PSE index (PSEi), which slipped 1%. Year to date, the stock has climbed 28.7%, beating the industrial index’s 4.7% decline and the PSEi’s 9.2% decline.

“We view Manila Water’s week-on-week gain as a technical bounce from oversold levels, likely induced by selling pressure as investors rotated capital into the initial public offering (IPO) of its industry peer, Maynilad Water Services, Inc.,” Unicapital Securities, Inc. Equity Research Analyst Peter Louise D. Garnace said in an e-mailed reply to questions.

He said the Maynilad IPO could serve as a “key valuation catalyst” for the sector, crystallizing Manila Water’s value. “We also anticipate robust earnings from Manila Water, underpinned by higher implemented tariffs across its East Zone and non-East Zone units, which could also influence its stock price,” he added.

Chinabank Securities Research Associate Andrei Jorge G. Soriano said the stock’s recent strength reflected “overall positive sentiment” in the water utility sector. “Key points for consideration among investors are stable earnings prospects given the scheduled tariff adjustments and an attractive dividend payout to hedge against market volatility,” he said.

Maynilad, the country’s biggest private water concessionaire, opened its IPO last month at P15 per share, matching the upper end of its revised price range, according to a PSE notice. The company aims to raise P34.3 billion in gross proceeds for capital expenditures and general corporate purposes.

“Manila Water’s continued network expansion is a positive catalyst as it is poised to grow its customer base, improve operational efficiency and support development in the East Zone’s high-growth areas,” Mr. Garnace said.

As of August, Manila Water’s network spanned 5,622.22 kilometers across the East Zone and Rizal, up by 58.58 kilometers from January. The company now serves 1.2 million water connections — 1.1 million domestic and 59,414 commercial and industrial — reflecting sustained expansion in its customer base.

Manila Water’s consolidated revenues grew 9.6% to P10.45 billion in the second quarter, bringing its first-half total to P20 billion, up 8.9% year on year. Net income attributable to the parent rose 15.6% to P8.28 billion from a year earlier.

Mr. Soriano expects full-year 2025 revenues to reach P40.2 billion. The stock carries a 5.3% dividend yield, with its most recent P0.17-per-share payout made on March 28.

Mr. Garnace set resistance at P36.70 per share and support at P34.50, while Mr. Soriano pegged immediate support and resistance at P33 and P37, respectively.