By Bernadette Therese M. Gadon, Researcher
INVESTORS chose to take profit on Globe Telecom, Inc. last week as the market’s overall negative sentiment amid Russia’s invasion of Ukraine dampened the telco’s data center joint venture and digital entertainment foray.
A total of 313,295 Globe shares worth P767.28 million were traded from April 4 to 8, data from the Philippine Stock Exchange showed.
Shares went down by 1.6% week on week, finishing at P2,480 apiece on Friday from its P2,520 closing on April 1. For the year, the stock fell by 24.3%.
“The news of Globe Telecom’s joint venture with ST Telemedia and its parent company Ayala Corp. as well as the launching of KROMA Entertainment seems to have been taken well by market players over the week,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in an e-mail interview on Friday.
“Unfortunately, the positive developments were overshadowed by negative sentiments abroad causing investors to adopt to a ‘sell on news’ mentality and cash in on any gains made,” Mr. Arce said.
He added that investors went back on the telecommunication stock “taking advantage of the dip” by Friday, however, it still underperformed compared with April 1’s closing.
Last Monday, Globe unveiled its joint venture with the Singapore-headquartered ST Telemedia Global Data Centres and Globe’s parent company Ayala Corp. to develop and build data centers in the Philippines, with a post-money valuation of around $350 million.
Globe aims to address the “significant and growing demand for data center services in the country.”
The Ayala-led telco remains to be the major shareholder in the venture with 50% ownership, followed by ST Telemedia (40%), and Ayala Corp. (10%).
It will also recognize a P10.5-billion pre-tax gain from partial monetization of its current data business center unit together with the revaluation of carrying value of Globe’s retained interest.
Separately, Globe officially launched on Wednesday its digital entertainment arm, KROMA Entertainment.
Formerly Sphere Entertainment, Globe’s media and entertainment leg first launched back in 2016 with film and TV production, and live concert/event management. KROMA added other projects such as digital magazine, artist and talent agency, and production house.
KROMA Entertainment Chief Executive Officer Ian Monsod said in a briefing that the entertainment company’s goal is to be the “leading digital entertainment player” in the country.
However, these developments were overshadowed by Russia’s invasion of Ukraine that pushed domestic inflation to a six-month high of 4% amid soaring global oil prices. The market’s sentiment was also dampened by the fresh waves of coronavirus disease 2019 (COVID-19) new infections in other countries.
In a Viber message, Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said that the announcements had given Globe a positive outlook, however, the stock and the market are dependent on current events and inflationary pressures’ impact on global growth.
“Aside from this are the uncertainties in the local election plus the possible surge of a new variant after the World Health Organization warned of it in the next two months,” he said.
“Basically, the [ST Telemedia] joint venture and the KROMA launch are good news for Globe. Unfortunately, those just got overshadowed [by the market’s overall negative sentiment],” Mr. Arce said.
“The percentage of disposable income for stock investments will likely decline,” Mr. Arce said. “In relation to Globe, with more and more people returning to the office and the potential resumption of face-to-face learning, spending for faster mobile and fixed internet plans may dwindle and eat into the company’s bottom line in the long run,” he added.
With the uncertainties posing on the stock market, Mr. Pangan said that the stock may be “bearish” in the short term, noting that the stock market will depend on how the conflict unfolds in the future, the Fed’s rate hikes, and the demand and supply strains.
Mr. Arce expects Globe to post P4.6 billion in net income in the first quarter and P5 billion in the second quarter to end the year with a net profit of “around P20.2 billion.”
Mr. Arce said that investors might opt to cash out amid the shorter trading week due to the Holy Week holidays.
He put his support and resistance levels for Globe at P2,220 and P2,680, respectively.
Meanwhile, Mr. Pangan placed his immediate support and resistance levels for the stock at P2,280 and P2,650, respectively.
