FREE Stock in Focus: GLO (28 Aug 2018) by Unicapital Securities

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Summary of Broker’s Recommendation
BROKER RECOMMENDATION TARGET PRICE ISSUED ON
Unicapital Securities HOLD 1970.00 28 Aug 2018

 

Check How Many Brokers Recommend this stock

Stock Rankings: All Stocks

Our Partner Broker’s Recommendation

We issue a HOLD rating as the previous Target Price has been achieved. Our previous Target Price of PHP 1,954.00 has already been reached and the market price currently limits profit upside. However, potential cost savings from the divestment of its tower assets would provide further upside.

 

Our Partner Broker’s Detailed Analysis

GLO’s topline revenue increased by 11.6% to PHP 74.2 Billion in the 1st Half 2018 driven by the data-related products. It is evident that GLO maintained its market share as the cumulative subscribers grew by 3% quarter-on-quarter (QoQ) and by 9% year-on-year (YoY) to 65.14 million.

Gross Profit and EBIT were also within our projections, since higher operating expenses are already accounted for in our valuation. Normalized net income rose by 21.3% YoY in the 2nd Quarter 2018, which led to a 13.1% increase in net income to PHP 8.5 Billion.

As a result, GLO declared regular cash dividends of PHP 22.75/share, equivalent to an 80% payout rate and a dividend yield of 4.7%.

 

Fresh funding needed to sustain dividend payments

Based on our estimates, negative FCF are projected from 2018 to 2019. We forecast a need for GLO to source out funds through debt or equity to service its future dividend payments. In an event that GLO decides to maintain its dividend policy, some of the proceeds from the anticipated divestment of tower assets could be used.

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Unicapital Securities
Unicapital Securities

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