MANILA, Philippines - Ayala-led utility firm Manila Water Co. Inc. has formed a holding company in Singapore in line with its bid to expand its presence in the Asia-Pacific region.
In a disclosure to the Philippine Stock Exchange, Manila Water said the new unit, Manila Water Asia Pacific Pte. Ltd., will provide the company with the commercial flexibility for its business expansion overseas.
Manila Water said Singapore, acknowledged as the business hub in the Asia Pacific region, offers diverse capital markets and financial services from more than 500 local and foreign financial institutions that the company can capitalize on.
Manila Water has already established its presence in Vietnam and India. In 2008, it entered into a five-year performance-based leakage reduction contract with the Saigon Water Corp. in Vietnam.
Manila Water also recently signed an agreement with Vietnam’s REE Corp. and Mitsubishi Corp. to develop water, wastewater and other environmentally-related projects in Vietnam.
A similar agreement was entered early this year with Jindal Water Infrastructure Ltd. of the OP Jindal Group, one of India ’s biggest business houses, to develop projects in the key Indian states of Rajasthan, Gujarat and Maharshtra.
Manila Water has been exploring business opportunities beyond its concession with the Metropolitan Waterworks and Sewerage System.
Meanwhile, credit rating agency Philippine Rating Services Corp. maintained its existing PRS Aaa issuer rating for Manila Water as well as its existing PRS Aaa rating for the utility firm’s outstanding P4-billion bond issue which will mature in 2013.
A company rated PRS Aaa has a very strong capacity to meet its financial commitments relative to that of other Philippine corporates. For the issue rating, obligations rated PRS Aaa are of the highest quality with minimal credit risk, as the obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
PhilRatings took into account the extension of Manila Water’s concession agreement, proactive management and competent technical staff with a proven track record; continuing improvements in operations; as well as the sustained profit performance and strong liquidity position amidst a challenging business and economic environment.
“The extension of Manila Waters concession agreement is seen as a reflection of government’s confidence in the company’s ability to deliver water services to its concession area. The 15-year extension until year 2037 gives Manila Water a longer time period within which to recover the significant amount of capital investments made and allows for further rationalization of earlier approved tariff increases in the short to medium term, thereby benefiting consumers. The extension also gives Manila Water more time to further develop the water and wastewater systems in its concession area,” PHilRatings said.
Manila Water continues to show sustained profit performance and a strong liquidity position. Net income grew from P2.8 billion to P3.3 billion while total revenues increased 6.7 percent to P9.5 billion in 2009.
The company’s ability to generate significant amounts of cash on an annual basis have led to a healthy cash balance of about P7.7 billion as of end-2009.