By Lourdes O. Pilar, Researcher
INVESTORS took positions on Converge ICT Solutions, Inc. last week after the release of its first-quarter earnings report.
A total of 47.16 million shares worth P924.87 million were traded from May 17 to 21, data from the Philippine Stock Exchange showed. This made the fiber internet service provider the seventh-most actively traded stock last week.
Week on week, its share price went up by 10.3% to P20.4 per share on Friday from its May 14 closing price of P18.5. Since the start of the week, the stock has increased by 35.3%.
“We attribute Converge’s rally to its favorable first-quarter 2021 performance which the company disclosed last May 17,” Philippine National Bank (PNB) Senior Equity Research Analyst Jonathan J. Latuja said in an e-mail, adding the stock outperformed the PSE index (-1% week on week) and the All Shares index (-0.2%).
In its disclosure to the stock exchange last Monday, Converge reported its attributable net income in the first quarter nearly tripled to P1.55 billion from P573.60 million in the same period last year, owing primarily to an increase in subscribers amid the ongoing pandemic crisis.
Total revenues, which include contributions from residential and enterprise, increased 83.2% to P5.55 billion in the first quarter from P3.03 billion in the same period in 2020.
It also reported its household coverage, calculated as the “total homes passed over total number of homes in the Philippines,” increased to 28.3% in the first three months of the year from 24.5% in the fourth quarter of 2020 and 14.5% in the first quarter of 2020.
Mr. Latuja said the growth in household coverage “reassured investors” that the company is on track to reach its target of having 55% household coverage by 2025.
On Converge’s outlook, he forecasts a 55% year-on-year increase in company’s revenues this year, given the company managed to grow its topline by almost 84% year on year in the first quarter.
He also noted the increase in its subscriber base to around 1.18 million during the period compared with 1.04 million in the previous quarter and 615,466 in the first quarter last year.
In a text message, Diversified Securities, Inc. Aniceto K. Pangan said the ongoing lockdowns will continue to drive the demand for broadband internet, to “dominate” the daily way of life, and that the company’s investment rollout to expand its business “will sustain their growth as seen from their revenue going forward.”
“[I]nvestor’s interest in the company will continue, but might be limited as most investors are on the sidelines due to the uncertainties in the market with its price near its [52-week high of P21.20],” he said.
Mr. Pangan placed the stock’s immediate support and resistance levels at P19.82 and P20.45, respectively.
PNB’s Mr. Latuja said the firm does not provide technical analysis for stocks, but he provided the stock’s target price of P22.6 per share “over the next six to 12 months.”