Manila Water, Metro Pacific, DMCI Rally as Duterte Offers New Contracts
Manila Water Company, Inc. (MWC), Metro Pacific Investments Corporation (MPI), and DMCI Holdings, Inc. (DMC) have all rallied by 12.29%, 4.01%, and 4.33%, respectively, on news that President Duterte has offered them new water concession contracts. Palace Spokeman Salvador Panelo said that the President has offered the water concessionaires, Manila Water and Maynilad, new concession contracts without the “onerous” provisions. Should MWC and Maynilad refuse to accept the new terms then the government will have no choice but to “nationalize” the water utility services. As of press time, though, the government has yet to release the details of the revised water service agreement. While the news of a new water service agreement with Manila Water and Maynilad should boost the sentiment on their share prices, we all know that the President, in a snap, can very well changed his tune.
From a technical standpoint, it appears that the shares of the three companies namely Manila Water, Metro Pacific, and DMCI may start to see a more sustained rally. As you can see from their individual price charts, the stocks seem to have just pivoted from interim bullish reversals (from a failure swing bottom in the case of MWC and MPI and from an inverse kilroy in the case of DMC). Tactically, for the “reversal” to remain valid, each of the stock has to sustain their rise above their respective pivot handles and more importantly not violate their most recent higher low bases. Note that a violation of the said ‘higher low base’ will nullify their upside breaks and set them in motion to resume their down legs. Fundamentally, consensus has ‘buy’ ratings on MWC, MPI, and DMC with a 12-month target of Php19.26, Php6.49, and Php9.62, respectively.
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*Consensus target price or average target price given by the major foreign and local brokers of various stocks on top of index names are available in our Equity Advisor!
