Megawide anchors long-term growth roadmap on infrastructure developments and precast technology

On June 30, 2020, engineering and infrastructure conglomerate Megawide Construction Corporation
(Megawide) held its first Virtual Annual Stockholders’ Meeting. During the event, the Company
unveiled its post-COVID plans as well as its roadmap for the long-term sustainability of the business.

“Although the COVID-19 pandemic has brought numerous challenges this year, our company’s youth
and agility enables us to take advantage of the new opportunities that have been created,” said Edgar
Saavedra, Megawide Chairman and Chief Executive Officer.

Recovery in 2019

Megawide generated consolidated revenues of P19.9 billion in 2019, 24% higher than the previous
year, driven by the recovery of its construction business and the sustained momentum of airport and
landport operations. EBITDA also increased 9% to P4.8 billion. In the first three months of this year,
this momentum was carried over as revenues jumped 42% to P5.1 billion and EBITDA rose 25% to P1.4 billion.

The construction business recorded Php15.3 billion in revenues, 21% higher than the previous year.
Notably, the precast segment emerged as a new growth segment for the business, with revenues from
external sales reaching P768 million, more than double the amount in 2018.

In the airport business, revenues rose 23% to P3.7 billion while EBITDA increased 10% to P2.3 billion, courtesy of robust passenger volume growth. Passenger volume at MCIA reached 12.7 million, with international traffic rising 11% to 4.3 million and domestic growing 9% to 8.4 million. New routes opened in 2019 include Nagoya via Philippine Airlines PR; Daegu via Jeju Air; Macau via Philippines AirAsia; Guangzhou via China Southern; and Quanzhou via Xiamen Air.
Meanwhile, revenues of the Paranaque Integrated Terminal Exchange (PITX) reached P555 million for its full year operations in 2019, despite lease commencement for the office tower beginning in the
last quarter of the year. EBITDA amounted to P106 million.

Navigating the New Normal

“As a young company, we pride ourselves in being agile, adapting easily to new and unfamiliar
situations, yet remaining potent. We faced this unprecedented global pandemic with a strategy that
redesigned our organization through innovation and helped us capitalize on new opportunities,” said
Chairman Saavedra.

Transport Facilities Ready for New Normal

As part of its new normal safety efforts, Megawide is introducing contactless technologies at the MCIA and PITX to mitigate the risk of transmission in the facilities. Contactless interphase for check-in, purchases, and inquiries are currently being rolled out at MCIA while the PITX will have mobile transactions for trip scheduling via its mobile app.

MCIA is has also built its own COVID-19 testing laboratory inside Terminal 2 in order to augment the testing capacity in Cebu and benefit returning OFWs and seafarers. MCIA resumed Domestic flight operations on June 6, 2020 while PITX resumed transport operations on June 8, 2020.

Precast Build Up and Focus on Infrastructure Projects

In terms of construction, Saavedra said that the company’s proprietary precast technologies will be
the benchmark with its functionality and suitability to new occupational safety protocols. “We
anticipate greater demand for precast technology to fast track infrastructure developments and
address the country’s six million housing backlog, aside from the acceptability of precast in new
normal protocols at construction sites,” he stated.

“In 2019, external sales accounted for 40% of our pre-cast business and contributed significantly to
our construction revenues. Moving forward, we aim to triple our pre-cast capacity to expand its
application to infrastructure and housing developments and potentially generate more external
sales,” Saavedra added.

Specifically, Megawide aims to take on more horizontal infrastructure projects through the
government’s modified “Build, Build, Build” Program. Among the projects being eyed are the MalolosClark Railway Project, which Megawide and its consortium members are awaiting official awarding after submitting the best bid for Package 1 in 2019, the North-South Commuter Line and the Metro Manila Subway projects. The estimated amount of contracts scheduled to be tendered for these developments is around P250 billion.

Long-Term Strategy

During the meeting, Saavedra also discussed the company’s long-term strategy to accelerate
shareholder value creation. “In the immediate term, we are looking to build a stable revenue stream
by entering new segments and increasing manufacturing capacity though the pre-cast technology; in
the medium term, we will capitalize on operational efficiencies and strengthen the synergies within
the larger organization.”

This strategy, he says, will enable Megawide to further enhance earnings quality and slowly transform into a sustainable and valuable investment alternative. “In the long run, we aim to stabilize and consistently increase our returns to support a healthy dividend payout and eventually mature into an attractive dividend-paying stock,” he revealed.

-PSE Edge

Source: Peso Economics