{"id":323275,"date":"2023-05-22T23:25:55","date_gmt":"2023-05-22T15:25:55","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323275"},"modified":"2023-05-22T23:26:31","modified_gmt":"2023-05-22T15:26:31","slug":"stock-in-focus-globe-telecom-glo-23-may-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-globe-telecom-glo-23-may-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Globe Telecom (GLO) – 23 May 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>GLO<\/td><\/tr>
Company Name<\/strong><\/td>Globe Telecom Inc.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>23 May 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 1,757.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We have a HOLD rating on GLO with a target price of Php1,757.00, which
offers a total return potential of 7.5% (including 12-month dividend yield of
5.9%).<\/p>\n\n\n\n

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

While the company benefits from the market-leading position in the mobile industry, we think GLO\u2019s mobile prepaid segment is more vulnerable to inflationary headwinds and industry maturity. We believe that elevated inflation would result in lower income consumers to deprioritize spending prepaid mobile SMS and data top-ups. While its fintech unit, Mynt (aka GCash), is showing positive indications of profitability (2022 earnings contribution: ~4%), we believe that a significant contribution to GLO\u2019s core bottomline would take a longer time to realize. The stock appears to be fairly valued at 6.6x 2023 EV\/EBITDA relative to its regional average of 6.7x.<\/p>\n\n\n\n

That said, we prefer rival PLDT, Inc. (TEL) for long-term dividend play (2024 dividend yield: 7.8%). TEL benefits from its market-leadership in the fiber broadband industry, which is still underpenetrated in the country. Its addressable market also caters to the middle-income segment, which is more resilient from inflationary headwinds, in our view.<\/p>\n\n\n\n

We project 2023\/2024 core net income (ex-perpetual securities distribution) to grow 6%\/8% to Php20.3 billion\/Php21.7 billion driven by sustained mobile revenues, offsetting muted topline growth of its fixed-line segment. However, imputing the dilutive impact of the stock rights offering (SRO), which was done last year, would result in a 2023\/2024 EPS growth of -6%\/+8% due to higher number of shares outstanding.<\/p>\n\n\n\n

GLO sold 3,711 towers (or 49% of 7,509 towers to be sold) for a total consideration of Php47.9 billion. Furthermore, the company plans to reduce its capital expenditures (capex) to US$1.3 billion (Php72.7 billion) in 2023 and further decrease to US$1.0 billion (Php55.9 billion) in 2024.<\/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>