DMCI Holdings, Inc. (DMC) FY2019 Financial Results
Earnings of DMCI Holdings, Inc. fell by a fourth in the fiscal year 2019 compared to a year ago.
The diversified engineering conglomerate net income dropped 25% to ₱14.85 billion compared to ₱19.85 billion in 2018 with the flattish growth in revenues at 4.66% to P90.98 billion.
DMC had a tough fiscal year 2019 because of lower average selling price of coal, higher replacement power costs, provisions for project cost overruns, and lower average price for lower grade nickel which contributed a huge loss of 1.4 billion a drop of 812%, followed by on-grid power fall by 44%, while construction plummets 23% and real estate plunge 22%.
On the other hand, Maynilad Water Holding Co., Inc. (Maynilad) contributed P1.8 billion, 1.6% a bit lower year on year, due to the water tariff adjustment and expected the revenue to fall further due to the renegotiation of 1997 water concession agreement labeled as “onerous contract” by no less than President Duterte.
The most troublesome is the nickel mining. It has contributed a net loss of 1.4 billion from a net income of 195 million from the prior year. The Semirara Mining and Power Corp. (SMPC) has contributed a flattened income as well as their real estate development.
As of December 31, 2019 SSS owned 239,797,559 shares while GSIS owned 184,151,939 shares, it is 1.81% and 1.39% respectively to DMC’s outstanding shares. My only concern is, what will these pension funds do with DMC’s continuous weakened financial results? I knew that when pension funds invest in any company, it always has strict provisions that they’re bound to declare yearly dividends consistently. Now, with all its shrink financials, how long they could sustain the said dividend? That is to be seen soon.
CONCLUSION: Is it time to invest DMC? Based on fundamentals, it is risker investment at this time. Although Maynilad is susceptible to regulatory risk, it contributed only 2% of total revenue and even if DMC will disp1ose this asset, it has a very minimal overall adverse effect. But… due to its dried up financial and the universal effect of COVID-19, which I always referred to as the WUHAN-400 plague, I’m expected DMC to continue tumble in the coming years, and I will keep my distance to this ticker until their financial results get better.
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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