{"id":326770,"date":"2024-02-16T01:27:25","date_gmt":"2024-02-15T17:27:25","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326770"},"modified":"2024-02-16T01:27:27","modified_gmt":"2024-02-15T17:27:27","slug":"stock-in-focus-globe-telecom-glo-16-feb-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-globe-telecom-glo-16-feb-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Globe Telecom (GLO) – 16 Feb 2024 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>16 Feb 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 1,800.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We set a target price (TP) for GLO at Php1,800.00 under our sum of the parts (SOTP)-based valuation containing the core business and Mynt. We maintain a HOLD recommendation as we believe that GLO remains fairly valued after performing well within expectations for 2023. <\/p>\n\n\n\n

We remain optimistic that 2024 should yield similar growth trajectory for GLO, unless a major catalyst for re-rating occurs in the next few quarters \u2013 GCash IPO. Our TP indicates a 2.4% share price upside, and a total return potential of 8.1%, including a 2024 dividend yield of 5.7%.<\/p>\n\n\n\n

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

2023 core earnings steady<\/h3>\n\n\n\n

Globe Telecom (GLO) recorded a flattish 2023 core net income of Php18.9 billion, in line with consensus estimates but lower than our projections. Consolidated service revenues hit an all-time high of Php162.3 billion, 3% higher year-on-year (y\/y), driven by mobile, and corporate data services. <\/p>\n\n\n\n

On a comparable basis, assuming the deconsolidation of ECPay (77% stake in ECPay sold to Mynt), revenues would have still grown 3% y\/y. The mobile business grew 5% to Php112.4 billion, driven by a 9% growth in mobile data business, though slightly offset by softer mobile voice (-9% y\/y) and SMS revenues (-10% y\/y). Corporate data revenues rose 7% to Php18.3 billion on better demand for (blended +14%) ICT solutions and services. The Home broadband sales declined 7% to Php27.1 billion mainly due to the 47% drop in fixed wireless, partially cushioned by a 14% growth in postpaid fiber services. <\/p>\n\n\n\n

Mobile-driven; data-heavy<\/h3>\n\n\n\n

Topline has been primarily driven by the data segment of the mobile business, from 48% (2019) to 54% (2023) share of total service revenues in the past 5 years. Data has also driven the mobile business, its 9% growth partially offsetting the 9%\/ 10% decline in voice and SMS revenues. This is further complemented by a blended ~20% increase in Average Revenue per Subscriber (ARPU) mainly on prepaid subscribers (GLO + TM) despite a 34% drop in mobile subscribers to ~57.0mn following the SIM registration act.<\/p>\n\n\n\n

Mynt contribution to NIBT increases ~4x to 7.3%<\/h3>\n\n\n\n

Mynt now contributes 7.3% to 2023\u2019s net income before tax (NIBT), ~4.0x higher y\/y
than 2022\u2019s 1.8% as GCash operations and services continues to expand. We expect Mynt to increase its contribution to GLO\u2019s bottomline, especially as the firm teases a possible initial public offering (IPO) within the year.<\/p>\n\n\n\n

Forecast downgraded to moderate assumptions<\/h3>\n\n\n\n

We adjust our core net income estimates for 2024\/2025 downwards 10%\/ 16% to Php19.5 billion\/ Php20.6 billion on more moderate assumptions and higher equity earnings from Mynt. Our new forecasts are still 3%\/ 6% higher y\/y. Service revenues are 5%\/ 9% higher to Php175.8 billion\/ Php192.3 billion on better mobile business. EBITDA estimates followed suit on a 4%\/ 7% increase to Php88.3 billion\/ Php97.2 billion on EBITDA margins of 50.2%\/ 50.6%.<\/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>