Still reported a loss

In the third quarter of 2020 (3Q20), MWIDE announced a 53 percent year-on-year decrease in revenue led by the building (-41 percent) and airport service (87 percent) segments. Lockdowns were triggered by the pandemic and limitations on the government’s site-workforce slowed building development, although travel bans culminated in a drastic decrease in passenger numbers. For the year, MWIDE reported organizational and net losses, worse than our initial estimates.

Decent rebound in construction

As versatility improved on looser controls, MWIDE posted a 136 percent Quarter-on-Quarter (QoQ) rebound in construction revenues. As capacity is at 60 percent, compared to 10 percent during GCQ and 20-30 percent capacity in MECQ, we expect this momentum will continue until the fourth quarter, but will possibly not offset the drag coming from the airport sector. Note that net losses reached P918 million for 9-Month 2020 and 74 percent of the sum contributed to the airport section.

Recommendation

We expect that the building industry can drive earnings, with travel bans expected to stay in effect in the early part of 2021 at least. We also assume that MWIDE with a specific airport commodity, a deep order book and attractive valuation is a good deal. With a target price of Php 11.00 per share, we recommend buying only for the long term.

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