{"id":324973,"date":"2023-09-21T00:41:27","date_gmt":"2023-09-20T16:41:27","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324973"},"modified":"2023-09-21T00:41:28","modified_gmt":"2023-09-20T16:41:28","slug":"stock-in-focus-globe-telecom-glo-21-sept-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-globe-telecom-glo-21-sept-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Globe Telecom (GLO) – 21 Sept 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<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>21 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Accumulate<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 1,778.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

While we maintain our 2023 EPS estimate for GLO, we trimmed our 2024 EPS forecast by 1% as we impute lower mobile average revenue per user (ARPU) and muted net additional subscribers in the fixed-line segment. However, we raise our target price (TP) to Php1,778.00 as we roll-forward our valuation. <\/p>\n\n\n\n

Nevertheless, we maintain our HOLD rating on GLO since: (1) we expect mobile revenues to remain under pressure due to the impact of elevated inflation on mobile top-ups, alongside limited net adds amid industry maturity; (2) churn rate in the fixed-line segment remains elevated due to tight competition; and (3) outlook on capex spending remains high, dragging free cash flows over the medium-term.<\/p>\n\n\n\n

Furthermore, with GCash (Mynt) IPO likely being delayed, we see minimal catalyst for a valuation re-rating. The stock trades at 6.7x FY24F EV\/EBITDA, which is above 5.9x regional peer average.<\/p>\n\n\n\n

<\/div>\n\n\n\n

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

Topline growth pressures to persist<\/strong><\/p>\n\n\n\n

Service revenues in 1H 2023 rose 2% to Php80.4 billion driven by mobile segment, which contributes 68% to the topline. Mobile data grew 5% to Php44.0 billion driven by higher data consumption. Home broadband revenues declined 7% to Php12.8 billion with subscribers dropping 31% to 2.2 million due to lower demand for home prepaid WiFi. Corporate data revenues rose 11% to Php9.1 billion driven by demand for cloud (+20%) and business app (+45%) solutions, as well as data center services (+15%).<\/p>\n\n\n\n

We maintain our projected 2023\/2024 service revenue growth at 1%\/5% as we continue to expect topline pressures in the mobile and fixed broadband segment. We see minimal improvement in ARPUs due to intensified price competition and muted net subscriber adds due to lack of growth catalyst over the medium-term. This is in line with management\u2019s guidance, which was revised downwards to \u201cmid-to-low single digits\u201d.<\/p>\n\n\n\n

GCash sustains growth momentum; accounting 5.3% of pre-tax income <\/strong><\/p>\n\n\n\n

Equity earnings from Mynt climbed 63% to Php972 million in 1H 2023, contributing 5.3% to GLO\u2019s pre-tax income (vs. 2.4% pre-tax income contribution in 1H 2022), owing to growing user base and improved daily average transaction count, which sustained the uptrend of its gross transaction value (GTV).<\/p>\n\n\n\n

<\/div>\n\n\n\n

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