{"id":321238,"date":"2023-02-01T09:32:07","date_gmt":"2023-02-01T01:32:07","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=321238"},"modified":"2023-02-01T09:32:08","modified_gmt":"2023-02-01T01:32:08","slug":"stock-in-focus-pldt-inc-tel-1-feb-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-pldt-inc-tel-1-feb-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: PLDT, Inc. (TEL) – 1 Feb 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>TEL<\/td><\/tr>
Company Name<\/strong><\/td>PLDT, Inc. (TEL)<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>1 Feb 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 1,650.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Target Price (TP) slashed to Php1,650.00<\/strong>; but recommend BUY <\/strong>on attractive dividend yield. We slashed our target price to Php1,650.00 from Php2,020.00 as we reduce our target EV\/EBITDA to 5.5x from 5.9x in light of potential governance risks implied by the capex overrun issue. Despite the downgrade, the TP offers a price upside of 13.5% and a total composite return of 20.6%, which includes a 12-month forward dividend yield of 7.1%. <\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

TEL reveals Php 48.0 billion capex overrun. An internal investigation revealed that TEL incurred a Php 48.0 billion budget overrun, equivalent to 12.7% of the company\u2019s total capital expenditures (capex), from 2019 to 2022. This means that the company\u2019s capex during the period was Php48.0 billion higher than what was initially reported in its financial statements. Based on the explanation of PLDT Chairman Manuel V. Pangilinan, it appears that TEL\u2019s network equipment vendors accelerated the deployment of equipment for the network rollout without such deployment being reported to management and reflected in TEL\u2019s financials. The company will record the capex overrun as additional property, plant and equipment in its balance sheet going forward.<\/p>\n\n\n\n

Booking higher depreciation charges is expected to drag forecasted 2023 earnings.
Assuming that the company will book PPE at the beginning of 2023, and that the additional PPE has a useful life of 10 years, then the company would incur additional depreciation of up to Php 4.8 billion, which would reduce core net income by Php 3.6 billion.<\/p>\n\n\n\n

Management will likely retain its dividend payout ratio of 60% of previous year\u2019s telco core net income. We estimate TEL\u2019s 2023\/2024 dividend yield at 7.2%\/6.4%, the highest among the telcos in our coverage.<\/p>\n\n\n\n

We estimate 2022 core net income to have declined 1% to Php 27.8 billion as higher employee costs and repairs and maintenance expenses offset revenue growth. Meanwhile, we project 2023 core net income to drop 22% to Php 21.6 billion, dragged by higher depreciation expense as the company books the capex overrun as additional PPE. Nevertheless, we forecast 2024 core net income to recover 10% to Php 23.7 billion as we expect revenue growth in fixed-line and broadband segment to offset the elevated fixed costs.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>