Outlier

By Abigail Marie P. Yraola, Researcher

AYALA-LED Globe Telecom, Inc.’s share price dipped last week due to a market sell-off prompted by global recession fears and rising interest rates to contain surging inflation.

Data from the Philippine Stock Exchange (PSE) showed 301,005 Globe shares worth P683.67 million changed hands from June 13 to 17, making the stock the 13th most actively traded in the local bourse during the week.

Globe shares finished at P2,220 apiece on Friday, down by 6.1% from a week ago. Year to date, the stock’s price has declined by 32.3%.

“Much of GLO’s movement [last] week was a reflection of the market as a whole rather than something specific to just the company itself,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in an e-mail interview, referring to Globe’s ticker symbol.

“Investors are on edge because of global recession fears, continued spikes in commodity prices, as well as rising interest rates, so prices of index heavyweights like GLO have been very volatile as of late.”

I. B. Gimenez Securities, Inc. Research Head Joylin F. Telagen said in a separate e-mail the mixed trend seen in the telco company’s movement stock price is due to financial markets’ global sell-off this week.

She said the movement was “in anticipation and eventually, unexpected ‘unusually large’ Fed rate hikes by 75 basis points (bps) while expecting another 50 to 75 bps in the next meeting amid inflation concern, which the FOMC (Federal Open Market Committee) participants revised up their projections to 5.20%.”

Last week, the Federal Reserve approved its largest interest rate increase since 1994, raising interest rates by 75 bps to temper soaring inflation in the US, Reuters reported.

In late February, Russia’s invasion of Ukraine sent oil and commodity prices to multi-year highs amid supply concerns.

Last week, Globe announced that its new technology will be used to facilitate fourth-generation (4G) technology acceleration and fifth-generation (5G) technology evolution while boosting energy efficiency by up to 15%.

The telco unit of the Ayala group said it had completed the deployment of a new series of antennas that efficiently enables the acceleration of 4G and the evolution of 5G technology.

Ms. Telagen said this development from Globe would eventually lead to better appropriate the stock’s market price.

“The improving energy efficiency that will sustainably improve or lower Globe’s electricity cost while continuing to improve its technology to 4G and 5G will attract more long-term investors,” she added.

“Significant updates about its operations and ongoing expansion plans will always compel traders to take a look at Globe,” Ms. Agravio said.

She also noted that investors have lately been “very keen” on updates regarding GCash operations of Mynt (Globe Fintech Innovations, Inc.), the fintech alliance of Globe, Ayala Corp., and China’s Alibaba group-affiliate Ant Financial.

“The sustained revenue momentum of GLO’s data-related products/services to add to non-telco revenues robust growing and manageable cost will sustainably provide a better bottom line that will encourage more investors to take a look at the company,” Ms. Telagen said.

Globe’s first-quarter attributable net income nearly doubled to P13.645 billion from P7.307 billion in the same period last year due to an improved top line and the partial sale of its data center business.

Meanwhile, its revenues increased by 1.7% to P43.557 billion from P42.847 billion in the first three months of 2021.

For Ms. Agravio, second-quarter earnings are estimated at P6 billion to P8 billion. By the end of the year, she expects Globe’s bottom line to reach P20 billion to P25 billion.

Similarly, Ms. Telagen sees earnings for the next quarter reaching P6.1 billion, while she expects the company to finish the year with a net income of P22.31 billion.

For this week, Ms. Agravio pegged’s Globe support price level at P2,200 while its resistance price level at P2,400.

Meanwhile, Ms. Telagen placed the support and resistance levels at P2,162 and P2,444, respectively.