SHARES in Converge ICT Solutions, Inc. fell last week despite the company’s positive earnings results.
Data from the Philippine Stock Exchange (PSE) showed the listed fiber internet provider ranking 18th in value turnover, with P323.58 million worth of 20.02 million shares exchanging hands from Nov. 11 to 15.
Converge’s shares closed at P15.88 apiece on Friday, dipping by 0.7% from its P16 close a week earlier.
Year to date, the stock jumped by 89.5%.
Stephen Gabriel Y. Oliveros, research associate at China Bank Securities Corp., attributed the stock’s volatility to a soft general market sentiment, as investors continue to assess the potential impact of recent offshore geopolitical developments on the domestic economy’s outlook.
However, Mr. Oliveros noted that strong price movement last Wednesday — which bucked the PSEi’s downtick — was likely reflective of investor optimism over the company’s favorable earnings result, fueled by sustained growth in subscriber numbers and improving margins.
For the third quarter, the listed fiber internet provider saw its attributable net income climb by 40.1% to P2.92 billion from P2.08 billion in the same period in 2023. Meanwhile, consolidated revenues grew by 17.2%, reaching P10.42 billion from P8.89 billion in the same period last year.
For the January to September period, its attributable net income reached P8.21 billion from P6.37 billion previously, while consolidated revenues for the period increased by 14.1% to P29.94 billion from P26.25 billion.
In a press release, Converge said that these results were driven by strong performance across its residential, enterprise, and wholesale segments.
Converge gained over 330,000 net additional residential subscribers in the first nine months, including more than 108,000 in the third quarter, it said.
For the period, FiberX saw its highest gross additions in the past 10 quarters, maintaining a churn rate of around 2%.
Additionally, the Surf2Sawa plan also recorded its highest quarterly gross and net additions, reflecting continuous demand from the underserved market.
Converge ended the period with a total of 2.46 million subscribers, achieving a 13.2% growth in residential revenues to P25.4 billion.
Recently, Converge announced a collaboration with streaming giant Netflix to offer its latest residential subscription plan, the Converge Netflix Bundles. Additionally, for the nine months ending in September, total cash capital expenditure reached P7.5 billion.
Jeff Radley C. See, head trader at Mercantile Securities Corp., said that the listed stock rallied strongly due to its strong net income results, which exceeded market expectations.
“In the telco sector, Converge is the only stock that outperformed, which is up 90% year to date,” Mr. See said in a Viber message.
For Mr. Oliveros, given these earnings results, efforts by the company to provide targeted offerings bode well for profitability prospects. This would allow the internet provider to cast a wider net for its captive market, he added.
“Having a more diversified customer profile would also provide Converge better insights on how to add more value to its offerings down the line,” he said in an e-mail.
For the year, he sees its earnings before interest, taxes, depreciation, and amortization reaching P23.5 billion.
“We think Converge prospects remain upbeat over the near term considering nascent growth opportunities in the prepaid market space, possible earnings windfall from its Singapore expansion, and revenue accretion from its continued efforts to scale its enterprise business,” Mr. Oliveros said.
He pegged support at P15.30 while resistance at P17.50.
For Mr. See, he sees the stock’s resistance at P17.40, while the support level is at P15.
“The stock will move sideways between P15 and P17.40,” he added. — Abigail Marie P. Yraola
