Financial Analysis between

MANILA WATER COMPANY INC.

and MAYNILAD WATER SERVICES INC.

GROUP 6
MANONGSONG, Xyrus
PAGATPATAN, Grace
VITAL, Jairus Kent

TM 205 RSM-01 AY 2019-2020

Philippine Water Supply System
 Privatization of MWSS

Poor Coverage Bad Service High NRW

Poor Long
Sewerage Procurement
59% 41%
MAYNILAD WATER SERVICES INC.

Subsidiaries:
● Philippine Hydro Inc.
● Amayi Water Solutions Inc.
 MANILA WATER COMPANY INC.

❏ Owned by

❏ MWPV caters to outside MM areas:

❖ Pampanga Bulacan Pangasinan Laguna
Boracay Cebu Zamboanga Tagum City

❏ MWAP caters to ASEAN countries:

❖ Vietnam Myanmar Thailand Indonesia

❏ MWTS handles product development:

❖ Healthy Family Purified Water
FINANCIAL RATIO ANALYSIS OF
PROFIT MARGIN
★ Percentage of sales that turned into profit
★ Profit Margin = Net Income / Sales
*amounts in thousands PhP

2017 2016 2015

Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad
Net Income 6,139,948 6,852,973 6,186,989 6,748,172 6,134,040 9,550,627
Sales 19,402,491 20,774,241 18,421,199 20,223,746 17,835,698 19,098,237
Profit Margin 31.65% 32.99% 33.59% 33.37% 34.39% 50.01%
★ Sales are consistently increasing from 2015 to 2017.
★ Maynilad has higher recorded sales and income v.s. MW from 2015 to 2017 that can be
attributed to its greater coverage and service charge.
★ Maynilad charges more v.s. MW (PhP 164 vs PhP 111 per 10 cubic meters)
PROFIT MARGIN
★ Steady decline in profit margin for
both companies that can linked to
their top 3 enterprise risks: water
continuity, CAPEX executions, and
uncontrolled NRW.
★ Maynilad’s drop in profit margin
was caused by the expiration of
income tax holiday (ITH) in 2015.
 ASSET TURNOVER
★ Indicator of the e ciency with which a company is using its assets to generate revenue
★ Asset Turnover = Sales / Average Total Assets
*amounts in thousands PhP
2017 2016 2015
Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad
Sales 19,402,491 20,774,241 18,421,199 20,223,746 17,835,698 19,098,237
Average Total Assets 93,980,821 90,347,680 80,608,486 84,265,880 77,734,195 76,947,225
Asset Turnover 0.21 times 0.23 times 0.23 times 0.24 times 0.23 times 0.25 times
★ Both companies are continuously increasing in assets since 2015.
★ Both companies share an average turnover of 0.23 times.
★ Signifies low margins
ASSET TURNOVER
★ Both companies had declining
asset turnover since 2015 due
to increasing non-revenue
water (29-32% for Maynilad,
10-12% for MW)
 RETURN ON ASSETS
★ Percentage of profit earned in relation to its overall resources
★ Return on Assets = Net Income / Average Total Assets
*amounts in thousands PhP
2017 2016 2015
Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad
Net Income 6,139,948 6,852,973 6,186,990 6,748,172 6,134,040 9,550,627
Average Total Assets 93,980,821 90,347,680 80,608,486 84,265,880 77,734,195 76,947,225
Return on Assets 6.53% 7.59% 7.68% 8.01% 7.89% 12.41%

★ Generally both companies’ assets are still able to provide profit without losses
RETURN ON ASSETS
★ Gradually decreasing due to high
NRW and inconsistent water
continuity from Angat Dam
★ ITH of Maynilad in 2015 is still evident
 EQUITY MULTIPLIER
★ Use of borrowed money to increase production volume
★ Equity Multiplier = Average Total Assets / Average Total Equity
*amounts in thousands PhP

2017 2016 2015

Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad
Average Total
93,980,821 90,347,680 80,608,486 84,265,880 77,734,195 76,947,225
Assets
Average Total Equity 46,471,192 40,261,654 42,050,340 37,900,154 37,410,281 31,702,843
Equity Multiplier 2.02 times 2.24 times 1.92 times 2.22 times 2.08 times 2.43 times
★ Annually increasing investors for both companies, favoring MW
EQUITY MULTIPLIER

★ Maynilad is borrowing more

money vs MW to support raw
water sourcing project, pipeline
renovations, and other projects
and operational activities.

★ MW invested more on water

treatment facility improvements
and sustainability projects.
 RETURN ON EQUITY
★ Profit available to shareholders to the capital provided or owned by shareholders
★ Return on Equity = Net Income / Average Total Equity
*amounts in thousands PhP
2017 2016 2015
Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad
Net Income 6,139,948 6,852,973 6,186,990 6,748,172 6,134,040 9,550,627
Average Total Equity 46,471,192 40,261,654 42,050,340 37,900,154 37,410,281 31,702,843
Return on Equity 13.21% 17.02% 14.71% 17.81% 16.40% 30.13%
★ Investors of Maynilad are experiencing more returns v.s. MW, which can be attributed by
Maynilad’s higher service charge
RETURN ON EQUITY

★ Steady decline in ROE, that can

be attributed to failure of meeting
CAPEX executions (ex. Delayed
pipe works and renovations).

★ ITH of Maynilad in 2015 is still

evident.
 CURRENT RATIO

*amounts in thousands PhP

2017 2016 2015
Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad

Total Current Assets 12,867,250 11,695,820 8,255,900 14,029,166 9,948,299 14,827,117

Total Current Liabilities 10,826,374 16,083,423 7,481,506 14,029,988 12,399,814 14,427,091

Current Ratio 1.19 0.73 1.10 .99 .8 1.03

 CURRENT RATIO
- Measure the company’s ability to pay short term obligations within one year.

★ While Manila Water is

continuously increasing,
Maynilad is declining to less
than 1. This means on 2017,
Manila water can pay their
short term debt more than
- Maynilad which has less than
1 current ratio

★
★
 QUICK RATIO
*amounts in thousands PhP

2017 2016 2015

Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad

Cash and Cash Equivalence 9,020,743 3,518,494 4,065,700 5,024,754 6,849,956 3,093,012

Receivable 2,043,816 2,602,129 2,368,589 2,492,645 1,864,848 2,428,812

Total Current Liabilities 10,826,374 16,083,423 7,481,506 14,029,988 12,399,814 14,427,091

Quick Ratio 1.02 .38 .86 0.54 .70 .38

QUICK RATIO
*amounts in thousands PhP

★ Both companies has less

than 1 quick ratio for 2015
and ‘16. But for 2017, since MW
is steadily increasing, it
reached quick ratio of 1 . This
means, MW is the most liquid
and can pay its short term
liabilities compared to
Maynilad.
 SUMMARY OF RATIOS
2017 2016 2015
Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad
Profit Margin 31.65% 32.99% 33.59% 33.37% 34.39% 50.01%
Asset Turnover 0.21 times 0.23 times 0.23 times 0.24 times 0.23 times 0.25 times
Return on Assets 6.53% 7.59% 7.68% 8.01% 7.89% 12.41%
Equity Multiplier 2.02 times 2.24 times 1.92 times 2.22 times 2.08 times 2.43 times
Return on Equity 13.21% 17.02% 14.71% 17.81% 16.40% 30.13%
Current Ratio 1.19 0.73 1.10 .99 .8 1.03
Quick Ratio
1.02 .38 .86 0.54 .70 .38
CASH FLOW ANALYSIS OF
CASH FLOW ANALYSIS
★ CSBP doubled from
2015 to 2017. Since
fair value of ESOP
shares amounting
to P6,143.22 (2015)
were increased by
P8,847.08 per share
(2017)
CASH FLOW ANALYSIS
★ On 2017, short term
investment
decreased by half
compared to 2016.
CASH FLOW ANALYSIS
★ Addition to service
concession assets
was a major factor
due to MWSS loan
designated for
existing projects,
the raw water
conveyance
component of the
Umiray-Angat
Transbasin Project
(UATP)
CASH FLOW ANALYSIS
★ There has been a
significant
increase in Trade
And other payable
during 2017
amounting to 2.7
from (750,926)
CASH FLOW ANALYSIS
★ There has been
additional
acquisitions for
Instrumentation,
Tools,
Transportation
Equipment mostly
in 2016.
CASH FLOW ANALYSIS
★ The Company sold
items of property
and equipment
total consideration
of P10.2 million,
P16.2 million and
P2.3 million in 2017,
2016 and 2015,
CASH FLOW ANALYSIS
★ On 2017, during the
regular meeting, the
Parent Company’s
BOD set and
approved cash
dividends of P660.54
per common share
amounting to P3.0
billion to all
shareholders
CASH FLOW ANALYSIS
★ Since 2015, service concession
assets contributed to the cash
outflow in operations like
rehabilitation works.

★ MW has been decreasing in net

cash from operations since 2015.
CASH FLOW ANALYSIS
★ Since 2015, MW has been
acquiring PPE.
★ Net cash used in investing
almost quadrupled in 2017 due
to PPE and sudden increase in
noncurrent assets.

★ In 2017, availment of long-term

debt was able to provide cash to
compensate those used from
operating and financing
activities.
CASH FLOW SUMMARY
2017 2016 2015

Manila Water Maynilad Manila Water Maynilad Manila Water Maynilad

Operating (204,214,581) 4,436,763 1,068,965,839 5,937,320 4,988,869,341 2,828,729

Investing (2,324,440,802) (515,726) (614,276,182) (788,721) (795,528,609) (312,979)

Financing 7,483,699,350 (5,427,297) (3,238,945,214) (3,216,857) (3,795,938,885) (3,611,276)

PRICE-TO-EARNINGS RATIO
★ P/E Ratio = Price per share / Earnings per share
As of 8/30/2019

Price Per Share (PhP) Earnings Per Share (PhP) P/E Ratio
Manila Water 22.50 2.51 8.98
Metro Pacific Investments
4.95 0.42 11.74
Corporation*

Utility Industry Average Price per share: 52.54

Utility Industry Average P/E Ratio: 12.42

★ Both companies are lower than the industry average thus they are undervalued.
★ In terms of investing, Manila Water is a better option as it may gain profit when stock
price climbs.

* Maynilad is part of Metro Pacific Investments Corporation.

 THANK YOU! :-)
Financial Analysis between
MANILA WATER COMPANY INC. and
MAYNILAD WATER SERVICES INC.
GROUP 6
MANONGSONG, Xyrus
PAGATPATAN, Grace
VITAL, Jairus Kent TM 205 RSM-01 AY 2019-2020
REFERENCES
Manila Water Annual Reports
★ 2017 | 2016 | 2015
Maynilad Annual Reports
★ 2017 | 2016 | 2015
Others
★ http://mwss.gov.ph/about/our-history/
★ https://think-asia.org/bitstream/handle/11540/2490/maynilad-mend.pdf?sequence=1
★ https://pbs.twimg.com/media/D1gep8UU0AYFbev.jpg
★ https://www.bloomberg.com/quote/MWC:PM
★ https://www.bloomberg.com/profile/company/MPI:PM
★ https://en.wikipedia.org/wiki/Maynilad_Water_Services
★ https://en.wikipedia.org/wiki/Manila_Water
Industry Average P/E Ratio computed from values reported at: •
★ https://www.pesobility.com/utils/pe-ratio
★ https://csimarket.com/Industry/industry_Financial_Strength_Ratios.php?ind=1203