Company Profile
Metro Pacific Investments Corporation (PSE:MPI) was incorporated on March 20, 2006 as a holding company for investments in real estate and infrastructure projects. MPI is 59.05%-owned by Metro Pacific Holdings, Inc.
MPI holds interests in water and sewerage utility company, Maynilad Water Services, Inc., through DMCI-MPI Water Company; toll roads through Metro Pacific Tollways Corporation (MNTC) and its subsidiaries, Manila North Tollways Corporation and Tollways Management Corporation; hospitals through Medical Doctors Inc. and Davao Doctors Hospital Inc., Riverside Medical Center, Inc., and East Manila Hospital Manager's Corporation; and real estate through Metro Pacific Corporation.
In 2010, MNTC participated in a public bidding conducted by the Bases Conversion and Development Authority (BCDA) for the right to manage, operate and maintain the 94-kilometer Subic-Clark-Tarlac Expressway Project (SCTEx) on an "as is, where is" basis for a period of 25 years extendable by another eight years or until October 30, 2043.
On July 20, 2011, MNTC and BCDA signed a Business and Operating Agreement (BOA) covering the assignment by BCDA to MNTC of its rights, interest and obligations under the Toll Operations Agreement relating to the management, operation and maintenance of the SCTEx.
Income and Operations
MPI currently operates on 4 core business segments:
- Water Utilities – The water utilities business segment primarily relates to the operations of DMCI-MPIC Water Company and Maynilad in relation to the provision of water and sewerage services.
- Toll Operations – The toll operations business segment primarily relates to the operations and maintenance of toll facilities by MPTC and its subsidiary, Manila North Tollways Corporation and an associate, Tollways Management Corporation.
- Healthcare – The healthcare business segment primarily relates to the operations and management of hospitals, nursing and medical schools and such other enterprises that have similar undertakings provided for by MPIC’s associates’ Medical Doctors, Inc. and Davao Doctors Hospital and subsidiaries Riverside Medical Center Inc., East Manila Hospital Managers Corp, Colinas Verdes Hospital Managers Corp and Asian Hospital Inc.
- Power Distribution – The power distribution business segment primarily relates to the operations of Meralco in relation to the distribution and supply of electricity.
MPI also has real estate operations through Neo Oracle.
Consolidated core net income increased by 27% from 3,945 million to 5,025 million as of 3Q2012. The higher earnings were brought about by 14% increase contribution from Maynilad, 4% in MPTC, 33% increase in its power segment and 107% in healthcare.
Stocks Valuation
The current upsurge in MPI's stock price has made its valuation a bit expensive. It currently trades at 16-17x PE and enjoyed an uptrend movement for last week after moving sideways for almost six months.
What's to Like?
MPI aggressively eyes expansion on its hospital network. It also acquired additional 2.7% stake in Meralco earlier in 2012. It plans to expand further its water business, possibly looking at potential partnerships abroad, particularly in Vietnam. It has also forged a partnership with Ayala Corporation to jointly pursue PPP projects. Overall, it can be said that MPI is in full swing for expansion.
Why Get Cautious?
Metro Pacific's financial indicators are actually pretty low at this point. While its net income margin is at 24%, it only posts 6.2% Return on Assets and 8.4% on Return on Equity. The net income margin looks good, but the low RoA and RoE means that has not fully utilized its assets.
Buffett Recommends...
Metro Pacific Investments Corporation is certainly a company to watch out for. Behind the business guidance and knowledge of Manny Pangilinan, it is only a matter of time until its aggressive moves are rewarded and converted into real income. Buying now even at a perceived expensive price will prove to be worth it five to ten years from now.
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