{"id":329239,"date":"2024-09-02T01:02:46","date_gmt":"2024-09-01T17:02:46","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=329239"},"modified":"2024-09-02T01:02:48","modified_gmt":"2024-09-01T17:02:48","slug":"stock-in-focus-converge-ict-cnvrg-2-sept-2024-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-converge-ict-cnvrg-2-sept-2024-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: Converge ICT (CNVRG) – 2 Sept 2024 by Regina Capital Development Corp."},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>CNVRG<\/td><\/tr>
Company Name<\/strong><\/td>Converge ICT Solutions Inc.<\/td><\/tr>
Broker<\/strong><\/td>Regina Capital Development Corp.<\/td><\/tr>
Opinion Issued on<\/strong><\/td>2 Sept 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 22.87<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We upgrade CNVRG\u2019s 12-month Target Price to P22.87\/share and maintaining our previous BUY recommendation, as CNVRG is exhibiting solid segmental performance and innovative product offerings.<\/p>\n\n\n\n

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

Converge Information and Communications Technology Solutions, Inc. (CNVRG) saw a significant increase in earnings in the 2nd quarter (2Q) of 2024, with its Net Income (NI) amounting to P2.7 billion, a +30% year-on-year (y\/y) growth, while its revenues experienced a +14% y\/y change to P10 billion. <\/p>\n\n\n\n

This was primarily driven by solid performance exhibited by the firm\u2019s residential and enterprise segments, consolidated fiber gross adds, and new enterprise products. In the 1st half (1H) of 2024, its NI rose to P5.29 billion (up 24% y\/y) and its consolidated revenues amounted to P19.52 billion (up 12% y\/y). <\/p>\n\n\n\n

In 2Q 2024, the residential segment\u2019s monthly ARPU declined slightly by -2.4% y\/y to P1.17 million, with FTTH lowering to P1.2 million (- 3% y\/y) and HFC amounting to P29k (-38.2% y\/y). The enterprise\u2019s monthly ARPU also declined by -10.2% y\/y to P9.3 million. Despite the reduced blended ARPU, CNVRG was able to observe a 19.4% increase in residential subscribers in 1H 2024, which led to a contribution of P16.64 billion (+12% y\/y) in revenues, while the enterprise segment contributed approximately P2.89bn (+16% y\/y).<\/p>\n\n\n\n

Increased costs of services in 2Q 2024 were also seen, reaching P3.7 billion (+30% y\/y), and growing at a faster pace than the change in revenues. Factors that led to the higher costs were the increase in depreciation and amortization, rent, and repairs and maintenance. These were partially offset by reduced amortization of deferred
contract costs for active subscriber accounts and a decrease in bandwidth and leased line costs.<\/p>\n\n\n\n

For the 2nd half (2H) 2024, topline growth is expected to be driven primarily by steady intersegment growth and an increased subscriber base, with products such as BIDA Fiber and Surf2Sawa continuing their growth trajectory and Fiberx exceeding targets. <\/p>\n\n\n\n

CNVRG also aims to deploy additional ports to address increased demand for residential products and leverage its network through its recent partnership
with Sky Cable. To date, the firm still has no current plans of providing dividends to its shareholders.<\/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>