• Is it time to buy MWC shares?



    THE share price of Manila Water Co. Inc. (MWC) on Nov. 2 dropped to P23.30 on the Philippine Stock Exchange (PSE) from a 52-week high of P33.90, but it was up from a year-low of P20.

    Here is a little bit of caution to readers of The Manila Times. Since Due Diligencer took the numbers mentioned in this piece from the website of the PSE, treat this simply as a report that is not intended to influence public investors to either buy or dump MWC shares. This is the reason for the title that poses a question.

    A recent posting on the website of the PSE showed MWC’s stock performance in the last 30 days – hitting a high of P24.65 on Oct. 21 after falling to a low of P21.75 on Sept. 29 and remaining there until Oct. 2.

    Theoretically, if a public investor had bought MWC shares at P21.75 any day between Sept. 29 and Oct. 2 and sold them on Oct. 21, he/she would have gained P2.90 per share, or 13.33 percent in less than a month. On the other hand, had he/she bought MWC shares at its month’s high of P24.65 and sold them at P23.30 on Nov. 2, he/she would have lost P1.35 per share, or 5.48 percent.

    Capital profile
    As of Dec. 31, 2014, Manila Water, which counted what it defined as “certified stockholders” at 905, reported 3.5 billion shares in authorized capital stock, consisting of 3.1 billion common with P1 par value, and 4 billion participating preferred shares with P0.10 par value. Of its authorized capital stock, 2.048 billion outstanding common shares and 4 billion preferred shares were outstanding as of the same cut-off period.

    In its latest public ownership report (POR) dated Sept. 30, 2015, Manila Water listed Ayala Corp. as principal stockholder, with 792.913 million common shares, or a 38.604 percent stake. Its employees owned 19.61 million common shares, or 0.956 percent.

    With Ayala and company insiders owning a total of 843.55 million MWC common shares, or 39.56 percent, Manila Water attributed to the public the ownership of 1.21 billion common shares, or 58.93 percent. Of the publicly owned common shares, 883.855 million were held by foreigners.

    All these holdings add up to 98.498 percent, leaving “other individual stockholders” with the remaining 31.015 million common shares equivalent to 1.51 percent of the company’s 2.054 billion outstanding common shares. The numbers are based only on Due Diligencer’s computation in the absence of detailed publicly owned MWC common shares.

    SSS holdings
    As of Sept. 30, 2015, of the 1.21 billion publicly held shares, PCD Nominee Corp. held for foreigners 883.081 million, or 42.994 percent of outstanding and 298.912 million MWC common shares, or 14.912 percent, for Filipinos. That’s a total of 1.182 billion MWC common shares held by the PCD Nominee as record stockholder for the public.

    (Note. The POR listing on foreign ownership of MWC common shares does not tally with the report on the top 100 stockholders as of Sept. 30, 2015. Due Diligencer has yet to find among MWC’s PSE posting the reason or reasons for the discrepancy.)

    Apparently, the MWC common shares owned by the Social Security System are among those held by the PCD Nominee. Of the SSS-held 96.222 million common shares, SSS Provident Fund owned 2.258 million; 1.748 million were assigned by SSS to the Employees Compensation Commission Fund. SSS, on the other hand, held 92.216 million MWC common shares.

    Incidentally, a Manuel V. Pangilinan is listed No. 98 in Manila Water’s list of top 100 stockholders as of Sept. 30. If he is one and the same as the MVP of the Indonesian-controlled Metro Pacific-PLDT group, then he must be moonlighting in this other listed company.

    Executive compensation
    Public investors who trade on listed stocks might be surprised upon seeing this compensation filing by Manila Water. In it, the Zobel-controlled company disclosed that it does not directly pay the nominees of corporate stockholders. Instead, it remits their pays and perks to the companies that they represent in MWC’s 11-person board.

    In the same PSE posting about its board’s compensation in 2014, Manila Water had two footnotes in which it said the board remuneration for “Messrs. Gerardo C. Ablaza Jr., Fernando Zobel de Ayala, Jaime Augusto Zobel de Ayala, John Eric T. Francia and Delfin L. Lazaro were paid directly to Ayala Corp.” and that of “Masaji Santo to Mitsubishi Corp.”

    (Note. Ablaza and company are Ayala group insiders. As such, they hold other executive posts in the conglomerate.)

    That’s a total of P9.1 million that made Ayala Corp richer by P9.1 million. Only P400,000 went to Mitsubishi, representing Santos’ fee for attending one board meeting in 2014.

    By the way, Manila Water should correct the agenda of its annual meeting, which included the “election of directors, including independent directors.” The company has four independent directors and seven regular directors who are nominees of the Ayala group.

    Independent directors are not, strictly speaking, elected but only appointed. They do not own enough number of common voting shares to qualify for a board seat in any of the more than 200 listed companies.



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