October 08, 2013

Maynilad opposes tariff cut

Our take: The submission of Maynilad of the notice of dispute officially starts the arbitration process which automatically puts a temporary halt on the implementation of the tariff cut.

Such a scenario could render a neutral effect on the financials of the water distributor (and, in effect, to MPI and DMC). Nevertheless, we see this legal issue as an overhang that could affect their respective share prices.

MPI appears to be more vulnerable than DMC in terms of impact to Enterprise Value. Maynilad accounts for 22% of MPI while only 13% for DMC. - WealthSec