{"id":330799,"date":"2024-12-05T12:42:59","date_gmt":"2024-12-05T04:42:59","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330799"},"modified":"2024-12-05T12:43:02","modified_gmt":"2024-12-05T04:43:02","slug":"stock-in-focus-globe-telecom-glo-17-may-2024-by-ap-securities-2","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-globe-telecom-glo-17-may-2024-by-ap-securities-2\/","title":{"rendered":"Stock in Focus: Globe Telecom (GLO) – 17 May 2024 by AP 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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>5 Dec 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 2,689.32<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
<\/div>\n\n\n\n

Data centers in the Philippines currently operate in the range of 50-MW and 200-MW. TEL still leads the data center market with its portfolio of 11 data centers with a total capacity of 100-MW while GLO has 5 data centers with a total capacity of 22-MW. GLO, however, is aiming to expand data center capacity by 6x to 130-MW by 2026. To keep up with demand and to attract hyperscalers such as Google & Amazon, Philippine telcos will have to attain data capacity in the gigawatts level. TEL currently leading the data center industry, with GLO in tow; but GLO could overtake TEL if it does not pick up the pace of its data center expansion. The rise of AI and data centers should also translate to an increased demand for enterprise services for the telcos, and with these factors in mind we maintain our BUY rating on TEL, with Target Price of P1,770.57 and GLO, with Target Price of P2,689.32.<\/p>\n\n\n\n

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

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

AI turbocharges data center demand<\/strong><\/p>\n\n\n\n

Globe Telecom (GLO)’s VP for enterprise data and strategic services, Jennifer Echevarria said that the company is looking at possible AI investments to increase operational efficiency in customer engagement and day-to-day operations. A precursor for GLO\u2019s future adoption of AI is its early investments in data centers, as these are necessary to provide the computing power, storage & memory demands of the resource-hungry AI. In fact, according to research done by McKinsey & Company, AI is a key driver of growth in data center demand with AI\u2019s contribution to total capacity growing by 33% annually.<\/p>\n\n\n\n

If you can\u2019t do it, get someone else to do it for you<\/strong><\/p>\n\n\n\n

If data centers are hot right now, why is TEL selling a minority stake? While data centers can deliver huge profits, they are operationally heavy and too different from the core business of TEL, which would cost additional manpower and resources to maintain. As such, TEL\u2019s sale of a minority stake in its data center business can help lower the capital requirements and TEL can allow its strategic partner to manage its data centers. This would also help take TEL one step closer to its goal of being free cash flow positive by 2025. <\/p>\n\n\n\n

In the case of GLO, they are already letting someone else manage their data centers through a partnership with STT GDC. STT GDC Philippines is a joint venture between GLO, AC and Singaporean data center operator ST Telemedia Global Data Centres. GLO is still the majority stakeholder, with STT GDC managing the operations of its data centers.<\/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>