MWC. Water Allocation Cut Puts a Number on the El Niño Hit

Highlights

• The National Water Resources Board cuts Metro Manila's raw water allocation to 44 cubic meters per second from October, down from the usual 50 to 53.
• MWC's ₱88.6 billion market cap sits at the bottom of its one-year range, with foreign investors net sellers.
• Vini Research Desk rates MWC a Buy, ~53% upside to our ₱50.40 fair value.

The Setup

Since our Sept. 25 note, the drought risk has turned into a hard supply limit. The National Water Resources Board will cut the allocation to the Metropolitan Waterworks and Sewerage System, which supplies both Manila Water and Maynilad, to 44 cubic meters per second starting October. The board is rationing Angat Dam ahead of what the weather bureau warns could be the most severe El Niño on record, and is also cutting irrigation releases to 20 cubic meters per second from the usual 30 to 35. At ₱33, MWC is down 5.98% over the past month and trades just 1.5% above its 52-week low of ₱32.50 from Nov. 4, 2025, well below the ₱44.90 high of May 6, 2026. Our momentum read on MWC is Bearish.

Source: news article

Our Read

The cut removes 6 to 9 cubic meters per second from the shared Metro Manila supply from October. MWC's fourth-quarter billed volumes take most of the hit until rains refill Angat. This is a volume shortfall on a regulated concession. With the stock already near its one-year low, the market is pricing a drought that is now measured and has a defined window.

Vini Research Desk rates MWC a Buy, seeing about 53% upside to our fair value of ₱50.40. Because the rationing trims volumes without touching the concession's earning base, MWC keeps room for future dividend growth and capital appreciation once supply normalizes, which benefits holders of the Passive Income Plan.

What We're Watching

• MWC's East Zone share of the reduced allocation and any service-interruption schedules
• Angat Dam levels through the dry season
• Fourth-quarter billed volumes in the full-year 2026 results