In the wake of the COVID-19 pandemic, many big industries like those in the engineering and construction sectors serve as catalysts towards the quick revival of the country’s economy.
Against all odds, it is noteworthy how the diversified engineering and infrastructure innovator, Megawide, has sustained operations, generated income, and continues to thrive amidst a global health crisis.
Today, Megawide operates as one of the largest and most advanced precast facilities in Southeast Asia.
Reasons to Believe: How Innovation and Engineering Excellence Contributed to Megawide’s Resiliency
Engineering excellence has been the bedrock of Megawide’s success and growth over the last 20 years.
Complemented by state-of-the-art construction solutions such as formworks, mechanized equipment, and specialized transport fleet. In addition, it has recently delved into German concrete mixing technology that aims to lower raw material costs by 10% and carbon emissions by 20-30%.
The Company’s Engineering, Procurement, and Construction (EPC) business segment is at the core of, and the biggest contributor to –revenue-wise –the company’s portfolio and sustainability. It is also one of the main channels by which Megawide seeks to contribute to its economic growth and advancement.
Landport and Airport Operations/Projects
As of 1H2021, Megawide’s airport assets continue to pursue financial and operational readiness amid setbacks caused by quarantine restrictions.
The increasing pace of inoculation and the upcoming national elections are expected to help boost domestic travel in the immediate term.
Additionally, despite the impact of the pandemic and community lockdowns, its Landport business delivered lease revenues of P317 million in 1H2021. It is 24% more than the comparative period in 2020, mainly from office towers and commercial spaces.
While consolidated revenues posted a modest improvement, the company expects the figure to increase substantially in the subsequent quarters buoyed by its resilient construction business.
Most of its revenues will come from 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.
Megawide’s Order Book as of 2021
Megawide 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.
For ongoing projects, its MCRP is currently underway. The scope includes the contract to supply concrete and formworks, which directly benefits its support and service units and can be replicated in other rail projects, separate from the EPC contracts.
The company is also working on the P26.3 billion contract with Suntrust Home Developers, Inc. for its Westside City Resorts World located at the Entertainment City Manila, a gaming and entertainment complex along Manila Bay.
The project includes structural works amounting to P6.3 billion and P20 billion covering the management of nominated subcontractors for mechanical, electrical, plumbing, fire protection (MEPF), interior design, and allied services of the Main Hotel Casino, including “additional architectural, structural and civil works.”
Megawide was also awarded the construction of a retail strip and theater mall in Parañaque City by Travellers International Hotel Group Inc., which complements the ongoing Suncity Hotel and Casino Complex.
Another project in progress is the Manila Water’s Aglipay Sewage Treatment Plant (STP) and contractor SUEZ. Megawide and SUEZ are responsible for designing and building the STP, which has a daily treatment capacity of 60,000 cubic meters, around Mandaluyong and southern San Juan, benefitting some 650,000 residents.
Megawide secured the design, supply, and build contract for 350 housing units with niche market property developer Johndorf Ventures Corp.’s Coral Village Project in Cebu in the precast space. The deal will utilize precast technology, presenting a more convenient, economical, and efficient way to construct mass horizontal development versus traditional methods.
The company also signed its 6th and 7th projects with PhirstPark Homes in Magalang, Pampanga, and Batulao, Batangas – covering more than 2,000 housing units. Bringing more than 12,000 units currently under the supply and builds contract of precast materials with Phirst Park.
As Megawide continues to embark on more ambitious projects over the years, the company also continues to innovate and upgrade its existing stock.
Megawide’s Promising Valuation
MWIDE’s price hovers around P6/share level and is even below its IPO mark in terms of stock performance.
The company went public in 2011 on a pure construction play, with revenues of P7.8 billion and an order book of less than P20 billion. The IPO price was pegged at P7.84/share, and the PSEi then was hovering along the 4,000-level mark.
During the COVID-19 pandemic, airport operations were heavily affected, and its impact was practically non-existent.
The Landport segment has promising prospects and is steadily contributing revenues. However, performance was also slowed down by the health crisis and needed to restart before reaching a steady state.
As such, Megawide is currently being valued primarily for its construction business, though appearing severely undervalued.
Megawide’s latest order book is P62.8 billion, more than 3x its IPO level, with significant upside if its bids for big-ticket projects are successful. Construction revenues are also forecasted to reach at least P15 billion this year. Double from what it was when it was listed ten years ago.
With the essentiality and bright prospects of its construction and transport-oriented developments, plus the recovery in air travel, there certainly is significant value hidden in Megawide stocks.
Conclusively, there’s no denying how Megawide’s ability to adapt and move forward through transit-oriented development further cements the fact that growth and sustainability are still possible amidst the pandemic.
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