{"id":330538,"date":"2024-11-21T11:11:14","date_gmt":"2024-11-21T03:11:14","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330538"},"modified":"2024-11-21T11:11:18","modified_gmt":"2024-11-21T03:11:18","slug":"stock-in-focus-converge-ict-cnvrg-21-nov-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-converge-ict-cnvrg-21-nov-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Converge ICT (CNVRG) – 21 Nov 2024 by AP Securities"},"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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>21 Nov 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 20.58<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We note that SkyCable Corp. is currently benefitting from the network sharing agreement with CNVRG already which should put them in a better financial condition a year from now. Considering the potential takeover, we reiterate our BUY rating on CNVRG with a TP of P20.58\/share which translates to an upside of 25% from its last traded price.<\/p>\n\n\n\n

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

Only time will tell<\/strong><\/p>\n\n\n\n

CNVRG and Sky Cable is once again the talk of the town with potential acquisitions of the latter. A news article from Philstar stated that Uy is determined to save Sky Cable from the risk of bankruptcy with the long-term goal of turning it into CNVRG\u2019s subsidiary provided that Sky Cable pay off a significant portion of their debt while also improving their financial performance. Uy stated that Sky can cut spending by P1-Billion a year if it lowers power consumption, removes pole rental, and slashes maintenance costs. We note that the CNVRG-Sky Cable network sharing agreement already aids this goal as it translates to lower infrastructure costs for Sky\u2019s network.<\/p>\n\n\n\n

Growing apart, but keeping an eye<\/strong><\/p>\n\n\n\n

Current industry estimates put the acquisition value of Sky at a minimum of P13-Billion for the takeover to push through, this is the sum of the P6.75-Billion valuation from TEL\u2019s previously scrapped deal plus P4.5-Billion worth of debt, and lastly, P2-Billion to sustain Sky Cable\u2019s personnel. We note that P3.2-Billion out of the P4.5-Billion are due in a year which would leave just P1.3-Billion in debt, assuming Sky is able to pay the amount due.<\/p>\n\n\n\n

This would thereby place CNVRG in a stronger position to consider the acquisition. If Sky meets these conditions, the synergy between the two could be a win-win as CNVRG would benefit greatly since the telco\u2019s Enterprise services has expanded into hospitality TV solutions (Converge Concierge) alongside recent partnerships with over-the-top media such as Netflix. Given Sky\u2019s current state however, we believe that the timing is not yet right as it would better serve CNVRG to focus on its growth while keeping an eye on the Sky as it picks itself up from debts & losses.<\/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>