Megawide Construction Corp. said it expects to generate P700 million in interest cost savings by 2027 after moving to reduce debt by P10 billion.
“We target to reduce debt by P10 billion in the next 12 months to improve overall liquidity and our overall leverage position,” said Jez de la Cruz, Megawide group chief finance officer.
Megawide said earlier this month that it would receive P9.4 billion in advances from its parent firm, Citicore Holdings Investment Inc. (CHII), and sister company Citicore Power Inc. (CPI).
The settlement will be completed through a combination of P3.5 billion in upfront cash and P5.9 billion in shares of Citicore Renewable Energy Corp. (CREC), which will be assigned to Megawide.
The company said this fresh capital will be used to reduce its outstanding debt, which was P36 billion as of the end of June.
First Metro Securities (FMS) said the debt reduction will unlock value for Megawide through immediate earnings accretion and boost its strong balance sheet.
Aside from improving its balance sheet, FMS said it expects Megawide to generate low double-digit growth in revenues across its construction, land port and real estate businesses.
“We believe this is justified by the increasingly visible impact of MWIDE’s 3-D Strategy (Deliver, Deleverage, Decarbonize), which we expect to drive a significant earnings uplift over the next two years,” FMS said.
FMS also forecasts the company’s net income to more than triple by 2027, from P551 million in 2024.
“A recovery in the Philippine real estate sector could boost demand for MWIDE’s construction and property development arms. Positive outcomes from the government’s anti-corruption drive may also favor large, listed contractors like MWIDE in securing public projects,” it said.
Given these factors, FMS has reinstated a buy rating on Megawide with a target price of P4.50, an 88 percent upside from the current market price of P2.40.
