Water companies to see ‘stable’ second half — analysts

By Sheldeen Joy Talavera, Reporter

WATER companies are expected to perform steadily in the second half as industrial and commercial demand remains stable despite cooler weather, an analyst said.

“Despite the cooler weather during the ‘ber’ months, demand is likely to remain stable due to the consistent need for water in industrial and commercial sectors, which continue to operate at high capacity,” Jayniel Carl S. Manuel, an equity trader at Seedbox Securities, Inc., said in a social media message last week.

Mr. Manuel said that as the Philippines recovers from the pandemic, construction projects — including housing developments and infrastructure — are picking up, leading to a steady demand for water supply.

“Government support for public-private partnerships in the water sector, as well as improvements in distribution networks, will also drive performance,” he said.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said that the outlook for water companies appears “promising.”

“Water companies may benefit from rising demand, as urbanization and industrialization continue to grow in the country,” he said in a Viber message.

Mr. Arce said that opportunities could arise from government infrastructure projects, especially those focused on improving water supply and sanitation.

“The sector could see growth if it capitalizes on smart water technology and improved water management solutions, addressing both supply inefficiencies and sustainability concerns,” he said.

Water firms serving customers in Metro Manila reported increases in their income for the first half, attributed to sustained volume and tariff adjustment during the period.

East zone concessionaire Manila Water Co., Inc. posted an attributable net income of P6.9 billion for the first half, up 36.8% driven by sustained growth in billed volume and tariff adjustments.

Maynilad Water Services, Inc., which serves the west zone network of Metro Manila, saw its first-half core net income climb by 29% to P5.6 billion amid the growth in billed volumes, tariff adjustment, and lower operating expenses.

Amid the stable outlook, analysts noted that water companies should be cautious of various risks posed by potential regulatory challenges.

“(Water) firms should remain cautious of potential regulatory hurdles, rising operational costs, and environmental challenges such as water shortages in certain regions, which could impact supply consistency,” Mr. Manuel said.

Mr. Arce said that climate change poses another threat as weather patterns, such as droughts or typhoons, could disrupt water supply or damage infrastructure.

“Careful risk management and strategic investment in technology and infrastructure will be crucial in maintaining growth during this period,” he said.