This document presents a financial analysis of Maynilad Water Services Inc. and Manila Water Company Inc., the two main water utilities in Metro Manila. It analyzes the companies' income statements, balance sheets, financial ratios including profit margin, asset turnover, equity multiplier, return on assets, return on equity, liquidity ratios, debt-to-equity ratio, and cash flow statements. The analysis finds that Maynilad has better financial performance in most areas, with higher profitability, asset efficiency, and ability to meet short-term obligations compared to Manila Water.

1. FINANCIAL ANALYSIS
Presented by:
Nuhman Aljani
Mary Jane Perena
Mario Rance
Jordon Serrano
UP Technology Management Center
TM205 S 1-4PM
Professor Raffy Mananghaya
TM 205
Team B: ALJANI, PERENA, RANCE, SERRANO

2. FLOW OF PRESENTATION
Water System in Metro Manila
Company Background
Income Statement and Balance Sheet
Financial Ratios
Cash Flow Analysis
Conclusion

3. WATER SYSTEM IN METRO MANILA

4. entire demand in
Metro Manila
96%
4,000
million liters
per day
2,400
1,600
Million l/d
million l/d
WATER SYSTEM IN METRO MANILA

5. COMPANY BACKGROUND

6. COMPANY BACKGROUND

7. COMPANY BACKGROUND
✔ Established in 1997
✔ Partnership of Benpres
Holdings Corporation (now
Lopez Group of Companies)
and Ondeo Water Services,
Inc.
✔ Supplies water on West Zone
✔ Benpres eventually left the partnership in 2006 to
settle a US$240 million debt. Then January 24, 2007,
Metro Pacific Investments Corporation and the
DMCI Holdings, Inc. took over the company and
able to pay the debt by January 2008.

8. COMPANY BACKGROUND
✔ Established in 1997
✔ Subsidiary of Ayala
Corporation
✔ Supplies water on East Zone

9. COMPANY BACKGROUND
West Zone
North Quezon City
North Caloocan
Valenzuela
Malabon
South Caloocan
Parts of Manila
Pasay
Parts of Makati
Paranaque
Cavite
Las Pinas
Muntinlupa
Cavite
East Zone
Parts of Quezon City
Marikina
Pasig
Pateros
Taguig
Makati
Mandaluyong
San Juan
Parts of Manila
Rizal Province

10. INCOME STATEMENT &
BALANCE SHEET

11. TOTAL SALES or REVENUE

12. NET INCOME

13. TOTAL ASSETS

14. TOTAL LIABILITIES

15. TOTAL EQUITY

16. FINANCIAL RATIOS

17. DUPONT ANALYSIS

18. PROFIT MARGIN = Net Income / Total Income
✔ The profit margin for both
companies is within the same
level.
✔ Compared to industry
average (US), which is
around 10%*, Maynilad and
Manila Water are performing
way better.
*http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html

19. ASSET TURNOVER = Total Income / Ave. Total Assets
✔ The asset turnover for both
companies is comparably low
but is understandable
considering they are in the
utilities sector;
✔ Maynilad is slightly performing
better compared to Manila
Water in terms of generating
revenue from its assets.

20. EQUITY MULTIPLIER = Ave. Tot. Assets / Ave. Tot. Equity
✔ Both companies are within
2:1* range, which is
considered an optimal balance
of debt and equity for a
company to finance its assets;
✔ Both companies maintain an
ideal financial leverage
* https://www.investopedia.com/terms/e/equitymultiplier.asp

21. RETURN ON ASSETS (ROA) = Net Income / Ave. Tot. Assets
✔ Maynilad is a little more
profitable compared to Manila
Water relative to their assets;
✔ It indicates Maynilad is
managed more efficiently than
Manila Water;

22. RETURN ON EQUITY ROE (%) = Net Income / Ave. Tot. Equity
✔ Maynilad is more profitable
compared to Manila Water;
✔ Maynilad is in a better
standing since it falls close to
17%* industry average (US).
* http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/roe.html

23. LIQUIDITY RATIOS

24. CURRENT RATIO Current Ratio = Current Assets / Current Liabilities
⮚ Both companies are having difficulties
meeting their short-term obligations;
⮚ Maynilad’s drop in 2017 was due to
decrease in assets (cash) as the
company incurred payments of around
P4B. Its increase in 2018 was due to
increase in assets - loans received from
Japanese banks, amounting to P5.5B;
⮚ Manila Water’s decline in 2018 was due
to increase in its liabilities - short-term
debt of P8.6B from Mizuho Bank to
acquire 18% share in East Water

25. QUICK RATIO Quick Ratio = Quick Assets / Current Liabilities
⮚ Almost the same with
current ratio value.
⮚ Both companies (especially
the Manila Water) are
having difficulty to meet their
short-term obligations.

26. DEBT-TO-EQUITY RATIO

27. DEBT-TO-EQUITY RATIO
⮚ The data for both companies are
very close and the difference is
somewhat insignificant.
⮚ Both companies are utilizing
more financing from its creditors
than from its shareholders but
within the range of industry
average, which is 1 t0 1.5*.
= Total Liabilities/ Shareholder’s Equity
* https://blog.hubspot.com/sales/debt-equity-ratio

28. P/E RATIO

29. P/E RATIO
⮚ The P/E ratio of both companies
are below the industry average,
which means they are relatively
“undervalued”.
⮚ For investors looking for value,
they might consider investing in
Manila Water; however, if they
are looking for growth, Maynilad
could be their option.
References:
https://www.bloomberg.com/quote/MWC:PM
https://www.bloomberg.com/quote/MPI:PM
https://csimarket.com/Industry/Industry_Valuation.php?s=1200
P/E Ratio = Price Per Share / EPS(As of 21 February 2020)

30. CASH FLOW ANALYSIS

31. OPERATING ACTIVITIES
⮚ In terms of operating activities,
Maynilad outperforms Manila
Water in the given three years.
⮚ Manila Water scored negative
during 2017 due to the large
amount they paid for inventory
fees.

32. INVESTING ACTIVITIES
⮚ In terms of investments, Manila
Water is more focused in
investing compared to
Maynilad.

33. FINANCING ACTIVITIES
⮚ Manila Water earned more from
their financing activities from
2017 onwards.
⮚ Both companies had cash
outflows in 2016.
⮚ Maynilad only managed to get a
cash inflow during 2018 but only
minimally.

34. CONCLUSIONS

35. CONCLUSIONS
⮚ Considering all the
financial aspects of the
two companies reviewed,
Maynilad seems to be a
better managed, with
robust financial activities,
more profitable, and has
more capability to settle
its short-term obligations.
Maynilad M Water
Profit Margin ✓ ✓
Asset Turnover ✓
Equity Multiplier ✓ ✓
ROA ✓
ROE ✓
Current Ratio ✓(-) (-)
Debt-to-Equity ✓ ✓
Operating Activities ✓
Investing Activities ✓
Financing Activities ✓

37. REFERENCES
Maynilad Water Services, Inc.
⮚ 2018 Annual Report
(http://www.mayniladwater.com.ph/uploaded/Maynilad-2018-AR.pdf)
⮚ 2017 Annual Report
(http://www.mayniladwater.com.ph/uploaded/Maynilad-AR-2017.pdf)
Manila Water Company, Inc.
⮚ 2018 Integrated Report
(https://www.manilawater.com/storage/files/1/manila-water-
investors/Results%20and%20Presentations/MWC_2018%20Integrated%20Re
port.pdf)
⮚ 2017 Integrated Report
(https://www.manilawater.com/storage/files/12/investor/Results%20and%20Pr
esentations/Manila%20Water%20Co%20Inc_Integrated%20Report_31Dec201
7.pdf)