LISTED fiber internet provider Converge ICT Solutions, Inc. was the seventh most actively traded stock last week after investors opted to pocket gains following its approved buyback program and talk about the company’s removal from a global equity index.
Data from the Philippine Stock Exchange (PSE) showed Converge ranked first in value turnover with P855.31 million worth of 54.33 million shares traded from Sept. 19 to 23.
Shares in the Dennis Anthony H. Uy-led fiber internet provider closed at P15.14 apiece on Friday, down 12.5% from the P17.30-per-share close on Sept. 16. Converge’s share price decline more than doubled since the start of the year.
“Mainly, the share buyback plan of P1.50 billion shares has contributed to [Converge being] one of the most active stocks last week,” said Diversified Securities, Inc. Equity trader Aniceto K. Pangan in an e-mail.
Last week, the board of directors of Converge approved a plan to buy back common shares of the company worth up to P1.5 billion to increase shareholder value and to show confidence in its fundamental value, business, and prospects.
Converge said that acquired shares during the buyback period may be re-issued by the company for valid corporate purposes, such as for an employee stock plan.
The buyback transaction will not adversely affect the company’s ability to fund any of its prospective and existing projects and investments.
Mr. Pangan said that partnering with UnionBank of the Philippines to combat cybercrimes could boost Converge’s credibility and support the increase in its subscriber base.
In a press release on Sept. 15, Converge said it had signed a memorandum of understanding with UnionBank to join efforts in fighting financial cybercrimes.
So far in 2022, Converge blocked more than 4.1 million unique web addresses tied to illicit content. It said that banking is the second top industry affected by cybercrime.
Jeff Radley C. See, an analyst at Mercantile Securities Corp., said in a Viber message that rumors of the removal of Converge from the MSCI Global Standard index made the stock the most actively traded last week.
“Rumors are circulating that Converge will be removed in the MSCI this coming November 2022. The stock was sold down by foreign brokers even before the rumor went out pushing the price further down beyond its IPO (initial public offering) price of P16.80,” Mr. See said.
PSE market data showed that the net selling of Converge shares amounted to P88.25 million from Sept. 19 to Sept. 23.
To recall, Converge experienced heavy foreign selling driven by the expiration of Coherent Cloud Investments B.V.’s 365-day lockup in October 2021.
Coherent Cloud, owned by US private equity firm Warburg Pincus, had a 15.83% stake in Converge put under lockup for 365 days, which expired on Oct. 8 and became tradable on Oct. 11, 2021.
Mr. See also said that the only news that contributed to the bullish sentiment on the stock is the approved buyback program.
For the first half of the year, Converge saw its bottom line hit P3.95 billion, up 21.5% from the same period in 2021. Its revenues increased by 36.3% to P16.05 billion from P11.78 billion previously.
Mr. Pangan expects Converge’s revenues to reach P9 billion in the third quarter and P33 billion for the full-year 2022.
“Converge may recover due to its oversold state and buyback program as [the] company sees the price is at a bargain,” Mr. Pangan said.
He placed the company’s immediate resistance at P17.30 and its immediate support at P14.88.
Mr. See expects Converge to trade at oversold levels and might be poised for a bounce.
He pegged the stock’s support between P15.00 and P14.50 per share, while its resistance at between P16.00 and P18.00 per share. — Lourdes O. Pilar
