By Ana Olivia A. Tirona, Researcher
INVESTORS stock up on Converge ICT Solutions, Inc. shares last week on the back of better revenue performance and the anticipated entry of Elon Musk’s Space Exploration Technologies Corp. (SpaceX) in the Philippine market.
Philippine Stock Exchange data showed Converge was the most actively traded stock in terms of value turnover last week. A total of 66.97 million Converge shares worth P1.97 billion were traded from March 28 to April 1.
The fiber internet provider closed at P30.00 apiece on Friday, up week on week by 5.3% from its March 25 finish but down by 3.7% from the first trading day of the year.
Regina Capital Development Corp. Equity Analyst Arielle Anne D. Santos said the stock’s movement last week was driven by Department of Trade and Industry’s (DTI) announcement on the preparations for Starlink, a unit of SpaceX by entrepreneur Elon Musk.
“A classic sell-on-news scenario wherein traders jumped in early in the week, then cashed in profits upon the release of DTI’s statement that it’s making preparations to facilitate the entry of Elon Musk’s SpaceX Leo here at home,” she said in an e-mail interview.
In February, Converge struck an agreement to lease fiber lines and other ground support to SpaceX’s Starlink project, which aims to launch a low Earth orbit (LEO) satellite network in the country.
On Thursday, the Trade department said SpaceX was establishing its wholly owned subsidiary in the Philippines.
The DTI said the Philippines would be the first country in Southeast Asia to acquire SpaceX’s technology that aims to deliver high-speed satellite connectivity even in far-flung areas.
Starlink’s network is comprised of more than 1,600 satellites as of mid-2021, and hopes to add thousands more mass-produced small satellites in LEO, which communicate with designated ground transceivers, the Trade department said.
The satellite company SpaceX is currently in the midst of scouting gateway sites in major cities and finalizing investment figures.
Meanwhile, Mercantile Securities Corp. Analyst Jeff Radley C. See said the buying pressure pushed activity for Converge.
“Coming from an oversold territory at P21.50, the stock bounced up hitting a high of P30.00,” he said in a Viber message.
“The company continues to produce good earnings which resulted in a 69.2% [year-on-year] revenue growth for FY2021. We think that the company will continue the growth this year and remain on track to reach approximately 55% of households by 2023,” he added.
Converge’s net earnings jumped more than twofold to P7.16 billion last year from P3.39 billion in 2020.
Revenues rose by 69.2% year on year to P26.48 billion last year. Revenue from its residential business went up by 83.2% to P23.13 billion, which was pushed by “significant subscriber growth.” Likewise, its enterprise revenue increased by more than a tenth to P3.35 billion.
Subscriber growth showed 163,000 new gross additions and about 115,000 net subscriber additions, bringing the number of total residential subscribers to 1.7 million.
Ms. Santos expects Converge’s bottom line to post a double-digit growth this year amid sustained demand for its residential business and rebound in enterprise businesses.
“April is usually a slow month for equities,” Ms. Santos said, expecting Converge to trade sideways in the medium term.
She placed its support at P27.60 and resistance at P31.40.
Mr. See pegs the stock to move down this week with support levels to range P28.50-P27.00 and resistance levels at P30.50-P33.00.
