GCash capital leads investors to take positions on Globe

By Lourdes O. Pilar, Researcher

NEWS of Globe Telecom, Inc.’s fintech affiliate securing fresh capital through an investment from a New York-based investment firm drove the former’s trading activity last week.

Data from the Philippine Stock Exchange showed a total of 461,060 Globe shares worth P957.73 million exchanged hands from Jan. 11 to 15, making it the 13th most actively traded stock last week.

The share price of the Ayala-led telecommunications firm closed at P2,100 on Friday, up by four percent from a week ago. Year to date, the stock has gained 4.1%.

“The expansion of the fintech arm of Globe has made it to the headlines as it has attracted fresh capital to further spur growth of digital payment and financial services. There is a huge upside in the fintech industry and Globe is taking advantage of it,” Mercantile Securities Corp. Analyst Jeff Radley C. See said in a Viber message.

In a disclosure by Globe to the bourse dated Jan. 8, it announced that Mynt (Globe Fintech Innovations, Inc.) — the fintech arm of Globe and operator of mobile wallet GCash — has raised over $175 million in fresh capital from investment firm Bow Wave Capital Management.

The fresh capital investment, made through a limited partnership fund managed by Bow Wave, is said to further spur the growth of financial inclusion and the digitization of payments and financial services in the country.

Moreover, the fresh capital from Bow Wave and its existing shareholders were raised in multiple tranches, with post-money valuation of the final tranches reaching close to $1 billion.

Bow Wave’s investment in Mynt will translate to a “minority equity interest” in Mynt, Globe said without disclosing further the terms of the investment.

“The capital injection raises GCash’s valuation close to $1 billion, which encouraged investors to speculate what Globe’s new valuation will be in light of this recent development,” said Philippine National Bank (PNB) Senior Equity Research Analyst Jonathan J. Latuja in an e-mail.

Mynt is owned by Globe, its parent Ayala Corp., and Ant Financial, an affiliate of Jack Ma’s Alibaba Group.

News reports noted the transaction brought Bow Wave’s stake in Mynt to 14%. On the other hand, shares of Globe and Ant Financial in Mynt have each been diluted to 40% from 46%. Ayala Corp.’s share was likewise reduced to 6% from 8%.

Globe saw its attributable net income for the first nine months of 2020 decline 10.15% to P15.89 billion from the previous year’s P17.68 billion. Service and nonservice revenues during the period reached P119.59 billion, 3.1% less than a year ago.

PNB’s Mr. Latuja forecast Globe’s revenues this year to grow by 4.2% year on year, mainly driven by a 28% expansion in its fixed service segment.

Mr. Latuja estimates Globe’s discounted cash flow-based target price at P2,200 per share.

For Mercantile Securities’ Mr. See: “Globe might move sideways with an uptrend bias [this] week as it pierces through its initial resistance at P2,100. Support level is between P2,050 and P2,000, while resistance levels are at P2,140 and P2,200.”