Investors continue to take cues from PLDT earnings report

INVESTORS continued to take positions on PLDT, Inc. stock last week following the release of the company’s annual earnings results early this month.

Data from the Philippine Stock Exchange showed a total of P1.045billion worth of 924,855 PLDT shares exchanged hands on the trading floor from March 11 to March 15.

Shares of the telecommunications company closed on Friday at P1,161.00, up by 2.56% from the previous trading day. It was also up 8% from its closing price of P1,075 the previous week, and 2.74% year to date.

In an e-mail to COL Financial Group, Inc. research analyst Adrian Alexander N. Yu said PLDT’s share price “rose significantly” last week as the market continued to price in the “positive results” from the telco giant’s earnings report on March 7.

“PLDT disclosed its full-year 2018 results with several noteworthy details, which may have caused the spike in trading volume,” Mr. Yu said.

“PLDT disclosed that in light of the strong full-year results, the company increased its full-year 2019 core net income guidance… In addition, PLDT’s results also showed a turnaround in its wireless business driven by improvement in subscriber count and average revenue per user,” he added.

Timson Securities, Inc. equities trader Jervin S. de Celis also pointed to the company’s earnings disclosure that drove up PLDT’s stock price.

“[T]he surge in [PLDT’s income] in 2018 may have helped and urged investors to buy PLDT shares at a discount since the company’s operation is returning to profitability...,” he said in a separate e-mail.

In its latest unaudited financial statements, PLDT reported its attributable net income surged 40.47% to P18.92 billion in 2018 from P13.37 billion the previous year, as revenues rose 3% to P164.75 billion on stronger demand for data.

On the other hand, PLDT’s core income dropped 5% to P26.2 billion, as it accounted for the P3-billion loss in digital arm Voyager Innovations, Inc. Excluding Voyager, the company said telco core income is 3% higher at P24.4 billion in 2018.

Service revenues grew 5% to P149.4 billion, 60% of which came from data services that generated P90.2 billion, up 37% year on year.

By business segment, PLDT’s enterprise unit contributed P38.4 billion in revenues, 10% higher than the previous year. PLDT Home also added P36.4 billion or 10% more from 2017, and wireless segment P62.5 billion or up 7%.

The company also declared a recordhigh allocation of capital expenditures (capex) in 2019 at P78.4 billion, an increase of 34% or P20 billion from the P58 billion realized last year. The aggressive capital spending allows the telco giant to expand its network amid the impending entry of a new player.

For 2019, PLDT has set a telco core income guidance of P26 billion, up 6.6% from last year’s P24.4 billion. Dividend payout is set at 60% of the core income.

Timson Securities’ Mr. De Celis expects PLDT to experience a slight pullback this week adding the company may “found support at P1,015 [per share] and may struggle going beyond P1,200 [per share]”

“Since the company is shelling out more capex for 2019, it may affect the bottomline performance of the firm for this year because that means more expenses that can cut its profit as it competes against [Globe Telecom, Inc.] So, PLDT may trade between P1,015 [per share] to P1,385 [per share] in the medium term as we wait for fresh catalyst to lift the company’s stock price,” he said.

For COL Financial’s Mr. Yu, “the higher-than-expected capacity should not be too worrying for investors.”

“Although PLDT had a record high capex, it is important to note that out of the additional P20-billion capex, P16 billion will be variable in nature, which implies that the capex will only be spent when there is revenue that is expected to be generated, while the remaining P4 billion is one off in nature related to additional vehicles and equipment to improve network rollout,” Mr. Yu said.

Mr. Yu sees PLDT’s support to be around P1,070 — the price per share of the stock “when the company released its earnings” — but still cautioned of the headwinds that a new telco player might bring.

“[W]e expect the share price to be volatile as the stock responds to a bevy of news related to the entry or the continued delay of the entry of the third player,” he said.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in through the Philippine Star Group, which it controls.