Metro Pacific Investments Corp. (MPI) share price bottom?
Is the MPI’s low and the close share price of 2.28 today (23-Mar-2020) the bottomed?
MPI disclosed at the bourse the impact WUHAN-400 (COVID-19) to its businesses and operations together with risk mitigation measures may be led to a reduction in revenues and that affects their 2020 financials.
The MPI investment in Los Baños Doctors Hospital will contribute to the company’s value in short-term, but as well as reduction to its long-term profitability projections, by canceling the Metro Rail Transit Line 3 (MRT-3) after its unsolicited proposal, which has been awarded the original proponent status (OPS), that was rejected by the government. MPI further said that they would no longer participate in any bidding should the project be auctioned by the government in the future.
On February 26, 2020, the MPI Board of Directors approved the implementation of a Share Buyback Program (SBP). The said program shall run for three (3) months from the date of the approval by the Board or until 26 May 2020, with the amount of up to ₱5 billion being allocated to effect share buybacks under the program. MPI further said that the purpose of the SBP is to enhance and improve shareholder value and to manifest confidence in the Company’s value and prospects through the repurchase of its common shares.
Although the group allocated for capital expenditures (CapEx) of ₱60 billion this year, why not add ₱5 billion instead of SBP to stimulate business operations to enhance profitability? A huge ₱5 billion CapEx additional could translate into reasonable profits, and significantly increased every shareholder’s investment value if properly allocated and managed.
CONCLUSION: The impact of the WUHAN-400 and SBP may take a while to recover the resistance share price at 7.60 on the 26th of July 2016. In my humble opinion, the low price below 1.50 on 18-Dec-2006 is on the verge of reality.
DISCLAIMER: I'm not a Certified Financial Planner. Published herein is my personal opinion and should not be construed as a recommendation, an offer, or solicitation for the subscription, purchase or sale of this security.
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