By Denise A. Valdez, Senior Reporter

CONVERGE ICT Solutions, Inc. is set to debut on the  local stock market today (Oct. 26), with the fiber internet provider only the second company to conduct an initial public offering (IPO) this year amid the pandemic.

Despite being the country’s second-largest IPO to date, analysts expect Converge’s share price to close lower on its first trading day.

The fiber internet provider concluded its P29.08-billion IPO on Oct. 16, where it offered up to 1.51 billion common shares at P16.80 each. It will list its shares on the PSE main board under the stock symbol “CNVRG.”

“At P16.80 per share, our projected 2020 price to earnings ratio for Converge is at 48.64x. With this, we see CNVRG as overvalued relative to its peers. Thus, our projection for CNVRG’s trading (on Monday) is quite biased to the downside,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

In an Oct. 12 disclosure, the company said its market capitalization is projected at P126.44 billion and public float at 20% after the IPO.

Other internet providers currently listed on the PSE are PLDT, Inc. and Globe Telecom, Inc. As of Friday, PLDT’s market capitalization was P288.43 billion, and Globe’s was P271.94 billion. The two debuted on the market in 1953 and 1975, respectively.

In terms of earnings for the first six months of 2020, Converge posted a net income of P1.26 billion, while PLDT and Globe booked P12.28 billion and P11.48 billion in attributable net income, respectively.

Converge was initially targeting to raise up to P41.55 billion from its IPO with a maximum offer price of P24 per share. It lowered the ceiling price by 30% after securing cornerstone investors, or foreign groups that pre-committed to subscribe to its shares ahead of the IPO.

“Though its offer price has become less expensive, the possibility of correction could not be discounted due to its lofty valuation,” Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message.

However, the local market has been rising since last week due to improving investor sentiment on the relaxation of quarantine rules in the Philippine capital. This may provide a cushion for Converge on its debut, Mr. Pangan said.

“The maiden offer of Converge comes at an opportune time when the local market is on an uptrend supported by net foreign buying,” he said.

The PSE index closed at 6,484.06 on Friday, up 585.59 points or 10% on a weekly basis. Foreign investors have also been posting net buying for three straight days.

Converge’s competitors PLDT and Globe closed at P1,337 per share and P2,020 per share, respectively, on Friday.

“With its vast expansion in the Visayas and Mindanao regions, you could expect Converge to sustain its growth momentum and increase its market share especially as a leading fixed broadband business in the country with better value for money proposition among its peers,” Mr. Pangan added.

In its prospectus, the company claimed to have a 55% market share in terms of high-speed residential fixed broadband as of end-June, citing research provider Media Partners Asia. During the first semester, its revenues surged 65% to P6.49 billion due to heightened demand for internet services as more people worked from home.

Converge is owned by Pampanga-based businessman Dennis Anthony H. Uy and is backed by US-based private equity firm Warburg Pincus. It intends to use the proceeds from its IPO to support expansion in Visayas and Mindanao.