By Lourdes O. Pilar, Researcher
INVESTORS of Converge ICT Solutions, Inc. opted to pocket gains after the lockup period expired.
Data from the Philippine Stock Exchange (PSE) showed Converge ranked first in value turnover with a total of P5.04-billion worth of 150.43 million shares traded from Oct. 11 to 15.
Shares of Dennis Anthony H. Uy-led fiber internet company provider closed at P31.80 apiece on Friday, down 5.4% from P33.60-per-share close on Oct. 8. Share price has more than doubled since the start of the year.
“Investors actively traded Converge [last] week as some found its price to be relatively more attractive versus its previous levels. This could mean that people still see Converge as a reliable long-term investment given its solid fundamentals,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in an e-mail interview.
“This positive sentiment was further boosted by the firm announcing midweek that it launched Converge Business,” she added.
In a separate e-mail, COL Financial Group, Inc. Research Analyst Adrian Alexander N. Yu said that foreign selling made the stock the most active this week.
“Converge witnessed heavy foreign selling for the week, which may have been driven by the expiration of Coherent Cloud Investments B.V. 365-day lockup,” said Mr. Yu.
“Regarding the Converge’s business segment, it is still too early to tell how this segment will contribute to the growth of Converge moving forward. Currently, 87% of Converge’s revenues still come from its consumer segment,” added Mr. Yu.
Coherent Cloud, owned by US private equity firm Warburg Pincus, has a 15.83% stake (representing 1.19 billion shares) in Converge, which were put under lockup for 365 days, expired last Oct. 8 and became tradable starting Oct. 11.
Meanwhile, Converge introduced last week its “Converge Business” segment, an umbrella brand focusing on business connectivity services and solutions.
The brand covers the company’s data transport and other information and communications technology solutions aimed at enabling small and medium enterprises, conglomerates, and large enterprises to thrive.
“Aside from the business segment news, more investors are attracted with the news that the company is gaining traction globally as it was included in the Financial Times Stock Exchange (FTSE) ASEAN Stars Index and will be traded in the US via ADRs,” Mercantile Securities Corp. Analyst Jeff Radley C. See said in a Viber message.
In a disclosure on Oct. 6, Converge was included in the global benchmark FTSE ASEAN Stars Index as the company shows strong growth.
The FTSE ASEAN Stars Index is intended as a “barometer and not to be used as the basis for investment products,” investment management company FTSE Russel, a subsidiary of London Stock Exchange Group.
For the first half of the year, Converge saw its bottom line nearly tripled to P3.25 billion, while its revenue increased by 81.5% to P11.78 billion.
“The company will likely be able to sustain its strong growth trend for the remainder of the year. We expect high double-digit net income growth,” Ms. Agravio said.
COL Financial is forecasting P24.9 billion in revenues for Converge for full-year 2021, up 59.2% from its full-year 2020 revenues.
“Given the high share price volatility this week, Converge will likely cool down and consolidate in the next few trading sessions,” added Ms. Agravio.
She placed the stock’s support at P30.00 per share and resistance at P36.00 apiece.
Mr. See expects Converge to trade sideways this week, ranging between P30.50 and P36.50. He pegged the stock’s support between P30 and P30.50, while resistance is at P33.70 and P36.50.
“Over the next few trading days, we should see some support around the P30.00-per-share region, or just before Converge went on its parabolic run to P46.00 per share,” Mr. Yu said.
“At its current price of P31.80 per share, Converge has already retraced 30.8% of its value from its recent high,” he added.
Mr. Yu put Converge’s resistance level at P38.00 to P40.00 per share.
