Stock Pick: MPI

For roughly a year, MPI has been moving below its trend resistance until it broke past it last December 2011 (mid-December) as shown in the chart below.

Interestingly, despite the strong momentum that the market has gained since January, MPI continued to consolidate.

Below is MPI's chart since breaking past the trend resistance.

It can be seen that MPI is still on a downtrend. However, there is a possibility of a reversal. Here are the reasons why.

SCTEX and NLEX - Metro Pacific Tollways Corp. (MPTC) allocates P2.3B for NLEX and SCTEX. According to MPTC president Ramoncito Fernandez, a bulk of the P2.3B (P2B to be exact) will be allocated for the Segment 9 road project which is a part of NLEX. The other project is the Segment 10 road project. Segment 9 will connect McArthur Highway in Valenzuela to NLEX while Segment 10 will connect McArthur Highway to C3 Road. For the record, MPTC controls the concession of the 84-kilometer NLEX.

However, MPTC is still waiting the final word from Malacanang for SCTEX.

MPTC subsidiary Manila North Tollways Corp. (MNTC) will operate and manage SCTEX for the next 33 years.

Hospitals - MPIC is eyeing to have a nationwide network of 15 hospitals in the next five years and a total of at least 5,000 hospital beds which is in line with the company's P10-B goal by 2016. The group is currently the largest hospital operator in the country with 1,800 bed capacity.

MPIC just recently bought 842,454,380 common shares or 43.5% stake of Asian Hospital, Inc. Asian Hospital is the first major private hospital with tertiary care facilities in southern Luzon. It has a 217-bed capacity and stands on a 17,258 square meter campus.

MPIC is also in the talks with Capitol Medical Center (CMC) which has a 300 bed capacity. CMC is one of the leading and premier medical institutions in Quezon City with more than three decades of delivering quality health care assistance. 

The 5 other hospitals that MPIC controls are: Makati Medical Center, Our Lady of Lourdes Hospital in Sta. Mesa, Riverside Medical Center in Bacolod, Cardinal Santos Medical Center in San Juan, and Davao Doctors Hospital in Mindanao.

MPIC is also eyeing hospitals at Northern Luzon, Central Luzon, Southern Luzon, Western Visayas, Central Visayas, Northern Mindanao, and Western Mindanao.

Core Income - MPI earned P5.1B in 2011 exceeding their P5B forecast. MPTC pushed MPI's profit up because of the strong demand. MPTC earned P1.48B in 2011. Earnings beat estimates because of the low operating expenses and the high earnings contribution from its 46% owned Tollway Management Corporation. MPI earned more than the forecast despite the unmet expectations from Maynilad and Meralco.

For 2012, MPI sets P23.2B budget. P11.9B will be used for Meralco, P8.4B for Maynilad, P1.8B for the hospital group, and P1.1B for the tollways.

MPI has a face value of P4.67.

However, MPI has a little cause of concern (at least short term) because of the gap up. Gap ups are normally being filled thus the ideal entry point is when the gap is being filled.

But since MPI has posted very strong fundamentals, it may continue its trek up. Notice that the closing price is also at the short trend resistance. If it breaks past its resistance, it is most likely to surge. If not, the gap may be filled.

Long term, this is a gem.