Outlier

By Marissa Mae M. Ramos
Researcher

INVESTORS bought Globe Telecom, Inc. shares last week following the company’s announcement it will continue to partner with Huawei Technologies Co. Ltd. despite the United States placing the Chinese tech giant on a trade blacklist.

The Ayala-led company was the ninth most actively traded stock in terms of value turnover with a total of 429,740 shares worth P898.4 million having exchanged hands on the trading floor from May 20 to May 24, according to data from the Philippine Stock Exchange (PSE).

The stock price closed on Friday at P2,088 per share, down 0.57% from the previous day. It was, however, up 4.5% from its closing price of P1,999 on Friday the week before. Year to date, it is up 9.9%.

Unicapital Securities, Inc. Technical Analyst Cristopher Adrian T. San Pedro attributed Globe’s stock movement to two things: net foreign buying and the company’s statement on reaffirming its partnership with Huawei amid the United States and other countries cutting ties with Huawei and other Chinese technology companies due to security concerns.

Data from the PSE showed net foreign buying for Globe stood at P403.1 million last week, 308.1% more than its recorded P98.8 million the previous week.

“Globe stands by Huawei and will continue to sell handsets and (buy) network gear from the Chinese firm despite the ongoing trade blacklisting by the US government,” Mr. San Pedro said in an e-mail.

“The company also reassured investors that their P63-billion capital spending on network rollout and 5G launch will not be disrupted by the ongoing trade war,” he added.

Globe President and Chief Executive Officer Ernest L. Cu said on Thursday that it affirmed its tie-up with Huawei, noting the 5G network is scheduled to launch next month.

Earlier last Monday, telco giants Globe and PLDT, Inc. announced they are working with Huawei to address customer concerns as Alphabet, Inc.’s Google is suspending ties with the Chinese tech firm amid the US-China trade war.

Reuters had reported on Tuesday that the US Commerce department granted Huawei a license to buy US goods until Aug. 19 to keep its existing telecoms networks and provide software updates to Huawei smartphones.

Google’s withdrawal of Huawei’s license to use its Android operating system means that Google services relating to the transfer of hardware, software, and technical services will no longer be available on Huawei devices, except those available through Android’s open source license. It also means future Huawei devices powered by Android will lose access to Google applications such as Google Play Store, Gmail, and YouTube. It will still, however, be available on existing Huawei devices.

Earlier this year, Globe had already partnered with Huawei in the development of the local company’s 5G network intended to accelerate its broadband speed from 50 Megabits per second (Mbps) to 100 Mbps.

The high-speed network is targeted to be launched by next month to locations with a high density of cell sites such as Metro Manila and other urban areas.

The telco company’s net income attributable to parent surged 43.74% to P6.73 billion in the first quarter of 2019 from P4.68 billion at the same time last year.

“As the company continues to upgrade its network infrastructure (4G LTE and 5G), the margins are expected to remain flat this year but will recover starting 2020,” said Unicapital’s Mr. San Pedro.

“I expect the net income for this year to hit at least P20 billion to be driven by mobile data and fixed home broadband revenues as the company continues to expand its market share in the Philippine market.”

In the coming weeks, Mr. San Pedro sees Globe trading sideways with support at P2,000 and resistance at P2,152 “with the possibility of testing P2,200 and P2,280 if it stays above P2,000 in the short term.”

For Timson Securities, Inc. trader Jervin S. de Celis: “Globe might struggle going beyond P2,150 as this area served as a previous resistance level in 2017 and 2018. For the support, the stock may experience a pullback to its nearest support at P2,000. It should hold above that level before retesting the 2,150.”

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