Megawide expects profit cut in ’18

Construction and engineering firm Megawide Construction Corp. expects to post a net profit of P1.85 billion this year, down by 14 percent from the estimated full year earnings last year, due to depreciation expenses from the opening of a new terminal in its Mactan-Cebu airport concession.

Megawide president Edgar Saavedra said in a text message on Friday that the company’s full-year 2018 guidance was disclosed in a recent investors briefing to institutional clients of Deutsche Bank in Hong Kong and Singapore.

“Consolidated revenue is projected to grow by 14.4 percent while consolidated Ebitda (earnings before interest, taxes, depreciation and amortization) is seen to jump by 26 percent, led by strong top line contributions from both our construction and airport operation business,” Saavedra said.

The construction business was expected to deliver a 12-percent year-on-year growth while airport operation revenues were also expected to post 32-percent year-on-year growth, he said.

“While net income in construction [is expected] to increase by 12 percent hitting the P1.3-billion mark, on the other hand, airport operation income will be soft compared to 2017 mainly because of depreciation impact, which is normal in an infrastructure business wherein you have huge capex (capital expenditure),” Saavedra said.

In the January to September period last year, Megawide chalked up a net profit of P1.38 billion, slightly up from P1.31 billion in the same period in 2016.

April Lee-Tan, head of research at online stock brokerage COL Financial, in a Twitter post said Megawide’s profit guidance disappointed. She added the P1.85-billion bottom line guidance for 2018 was 10.2 percent below consensus forecast.

In the last two trading sessions, shares of Megawide have fallen by 6.2 percent as investors digested the news.