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Investors dump shares of water firms

MWSS ruling seen detrimental to utilities’ profitability


Investors dumped shares of water utility-related stocks Friday, weighing down the overall stock market, after regulators ordered the metropolis’ two private water concessionaires Manila Water Co. and Maynilad Water Services Inc. to cut water tariffs for the next five years.

MWC shares slid by 14.52 percent to close at P26.50 a share while Metro Pacific Investments Corp., the parent company of Maynilad, shed 6.38 percent to end at P4.40 a share as investors reassessed profit expectations on their water distribution businesses.

As these stocks are both part of the main-share Philippine Stock Exchange index, the local stock barometer slumped by 62.37 points or 1.01 percent to close at 6,133.24. The index ended in negative territory for the second session, likewise tracking profit-taking across regional markets.

Ayala Corp. (-0.89 percent), the parent firm of MWC, and another key investor in Maynilad, DMCI Holdings (-1.62 percent), likewise extended their decline from Thursday, the day when the MWSS’ ruling on rate rebasing came out.

“MWSS judgement is negative for both water utility concessionaires but is more substantial for Manila Water compared to Maynilad. The annual reduction for Manila Water is five times greater than that of Maynilad’s comparable rate reduction. Presumably this is because Maynilad Water has been operating under the rate-rebasing mechanism far longer than Maynilad, which was originally under the Lopez Group, and therefore benefited from the inclusion of corporate income tax in the tariff,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza & Co.

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Tags: Business , dumping , manila water co. , Maynilad Water Services Inc. , stocks

  • joboni96

    break the stock prices then
    nationalize these foreign owned water companies

  • eight_log

    This is indeed a very good development!!!! Kung seriouso ang gobyerno … dapat bilhin nalang nila ang mga concessionaires na yan!!!

  • Mark

    Gahaman kasi sa kita ang 2 water frims, sa tulong ng pagsuhol sa MWSS, buti na lang may NGO na nagbabantay sa 2 kurakot na water frims na yan.

  • http://www.yahoo.com JOSE RIZAL

    At the contract deliberation stage,or even before that, they (the concessionaires) already knew it (on how to manipulate everything to come up with the rate tantamount to profiteering). At those stages, they already knew their defenses, advantages and disadvantages. When/If the rate reduction is in line with the T’s & C’s of the contract, then, why cry foul?

  • Ramon Guerrero

    What makes the decline in the stock market so alarming is that it arrested the first steady climb the country has had in a long time. Whatever benefits the President’s economic reforms brought is now being eroded. What’s more, the decline started long before the dumping of these shares. Investors could smell it in the air: All the protests on water have made them hesitant to put money into the country.

    Sadly, the water utilities were the most successful Public-Private Partnership project we had, but the MWSS bent to populist (read: leftist) agitation.

    The concessionaires warned that if MWSS took this move, there would be protracted legal wrangling (and water rates won’t change a whit). In the meantime, the stagnation will deteriorate into steep decline as more and more investors pull out, disillusioned by what they know will be our typical interminable deliberations, plus they will also be horrified at the thought of one of the one positive aspect of our wretched infrastructure being managed by a government fueled by pork barrel funds.

    • jamesgeorge

      You are worried about the investors flight because of their fear of stagnation of their projected income? Let them go wherever they pleased because if a utility service such as providing water, a basic need does not conform to a fair and just treatment of the millions of ordinary filipinos, then the govt should step in and defend the people! Are you saying that the practice of overstretching a provision wherein taxes and fees shall be charged to the consumer includes income taxes, justifiable? If you are a foreign investor, i might treat you kindly, but i think you are pinoy, and you are defending a predatory big business practice which is unjust and unfair? Do you know what overcharging does to millions of household in our country? It might have taken out meals on the table many,many times?

    • http://www.yahoo.com JOSE RIZAL

      Why worry?

  • Pablo Juan

    Ika nga.. the stocks dont “hold water”.

  • jamesgeorge

    The Holy Bible says it all, in the almighty God”s words, the high and mighty will be fallen and the low and weak will be raise up by the lord! Every time, old people, learned and wise speak, they say, “aanhin mo ang gabundok na pera, eh hindi mo naman madadala yan sa hukay” eh, siguro ang sagot ng mga ganid na negosyante, “eh ipamamana ko sa mga anak ko”

    At ang akala mo naman, nagawan mo ng malaking pabor at pagmamahal ang mga anak mo, sa pagbigay mo ng gabundok na pera? Yan ang malaking pagkakamali mo, sasabihin ng matalinong matanda kina Pangilinan,ayala,gokongwei,sy etc… Yan ang sisira sa mga anak mo at Kung hindi man, sa mga apo mo at kaapu apuhan mo! Bakit? Dahil hindi na sila magiging masaya, dahil maghahanap na sila ng kasiyahan na sisira sa buhay nila at magiging saksakan ng tamad ng mga yan!

    Inuulit ko hindi humihingi ang mga tao ng libre o diskwento sa inyong mga pangilinan, ayala, gokongwei at mga sy etc… Yung tamang singil lamang at makatao at walang panlalamang! Yun ang hinaing ng mga tao!

  • jamesgeorge

    My salute to the MWSS board for siding with the people this time! The Ayalas,Pangilinan”s and DMCI”s greed has been tempered!!! But this will not last long because these greedy businessmen will take it from other utilities,like meralco, PLDT, cable tv etc… Did you notice how meralco keeps overcharging the people and then when exposed, they will return some of their loot thru refunds which did not even consider the interest or cost of money! And has any government agency imposed a fine for overcharging? No, none at all!

    So not only meralco guilty of overcharging, but manila water and maynilad, mindlessly, without regard for the poor and suffering filipino household, charged their income tax, but even gifts,representation and entertainment, and everything imaginable to the people! So where are the conscience of these businessmen who looked respectable, high and mighty, and as if they would live forever, with the way they loved money, lots, and lots of money while ignoring,turning a blind eye on the people!

    • usapan2

      watch the youtube of ka mentong (herman tiu laurel). he discusses topics about the excesses of utility companies like meralco, telcos, maynilad, etc.

      • jamesgeorge

        Got it thanks!

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