Reader Question: What's your take on $MWC at these levels?

Hey there, it's always good to here from you ;-)

Here's The View

If I had some cash in my portfolio, I wouldn't mind to start accumulating at current levels. I would also make sure that my sizing is in such a way that when the price continues to drop from my entry point I'll be a happy buyer at lower levels and I can stomach the paper losses of my initial entry.

I came to this view due to the following reasons.

1. $MWC is fundamentally sound stock selling at attractive valuations.

$MWC (Manila Water Co) as Bloomberg describes it is a full service water utility company serving the Philippine Market. 

Though MWC's customer base is mainly in the Metro Manila, the company is also diversifying it's customer base within the country by catering to non-luzon markets such as Cebu and Boracay, on top of this they are also diversifying regionally in the Asean region with specific interest in the countries Vietnam, Indonesia and Myanmar.

That said we can say that MWC is a business with a strong source of income coming from it's cash cow region - Metro Manila with exciting growth prospects in the future to become not just the water-seller in Metro Manila/Philippines but a key player in the Asean region as well. But of course there are risks.

The main concern with MWC right now is the increasing regulatory risks involved on water tariffs. Simply put, there so called "cash cow" region - Metro Manila is being threatened. There is a risk that the price they will sell the water in Metro Manila will be lower hence this could greatly reduce their sales and thereby earnings and thereby the stock price.

So the question here is do you think these concerns is permanent and will cause MWC to go out of business? Or is this just one of those "bumps" along the way? Let's dig in deeper to strengthen our conviction...