November 24, 2013

Megawide talking to possible LRT bid partners

Megawide Construction Corp (MEGA, Not rated)) is reportedly talking to unnamed potential foreign partners in relation to its plans to bid for the P64.1b LRT1 extension project. A BusinessWorld report today quoted the company’s chief marketing officer as saying it was contacted by a company based in Asia which has railway technology and construction experience for possible Public-Private Partnership (PPP) bid. MEGA has won some of the smaller PPP projects and is seeking to participate in the bigger projects.

Our take: We view positively the company’s continuing diversification into infrastructure. If successful, this strategy should expand its exposure into bigger projects that will ensure earnings sustainability. Thus, MEGA’s more aggressive positioning for the bigger PPP projects bode well for the company especially in light of government’s recent decision to enhance the terms of the big-ticket projects to make them more profitable to bidders. Securing a foreign partner and joining consortia can boost MEGA’s chances of clinching any of the bigger contracts vs. formidable competition from the country’s top conglomerates. – WealthSec