Manila Water Company Inc Deep reserves, near-term debt headwinds; remain Neutral

Research evidence excerpt

Manila Water Company Inc Deep reserves, near-term debt headwinds; remain Neutral

J P M O R G A N Asia Pacific Equity Research

15 May 2026

Manila Water Company Inc Neutral

MWC.PS, MWC PM

Deep reserves, near-term debt headwinds; remain Price (15 May 26):Php44.05

Neutral ▲Price Target (Jun-27):Php39.00 Prior (Dec-26):Php35.00

We rate MWC Neutral with a new Jun-27 PT of Php39, implying 10% potential

downside. We think the market is underestimating B/S and interest burden from recent Water

acquisitions, while pricing in multi-year catalysts too early. We expect core NIAT to Jelline Gaza, CFA AC

decline 10% y/y this year as interest expense balloons (22% of EBITDA, +44% net (63-2) 8878-1131

debt), exacerbated by 75% floating-rate debt mix amid rising rates. Net D/E will climb jelline.gaza@jpmchase.com

J.P. Morgan Securities Philippines, Inc.

to 1.7x post the Php32.4bn Wawa JV and Php12.3bn Agua de Puebla deals. Wawa

Jeanette YutanDam access offers resiliency ahead of the looming El Niño, but we argue that

(63-2) 8878-1188

minorities are paying today for an excessive buffer, despite having had a prior, asset- jeanette.g.yutan@jpmorgan.com

light 30-year offtake agreement. Utilization sits at just 30MLD against 518MLD of J.P. Morgan Securities Philippines, Inc.

reserved capacity, with only an 80MLD treatment plant built and another 220MLD Sumedh Samant, CFA

coming this year. We acknowledge the bull case around PSEi index inclusion and the (66-2) 684 2682

dam’s excess capacity, but MWC's market cap currently ranks only 29th and would sumedh.y.samant@jpmorgan.com

need to rise at least 20% to re-rate to ~10x 2027E P/E to qualify, while dam JPMorgan Securities (Thailand) Limited

monetization remains dependent on absent third-party contracts. The East Zone rate