Undervalued’ Globe stocks on investors’ radar – analysts

Manila, Philippines — Analysts are urging investors to take a closer look at Globe Telecom Inc., the telco-to-tech provider, as they believe the company's shares are currently undervalued. B.A. Securities Inc. vice president Jofer Gaite issued a "strong buy" recommendation on Globe, pointing out the significant discrepancy between the stock's market price and its perceived true value. Gaite stated that analysts estimate the company's worth at P3,620.8 per share, while it is currently trading at a much lower P1,748.

The analyst highlighted several upside risks that could drive Globe's valuation upwards in the future, including the forthcoming P92.3-billion initial public offering (IPO) of its e-wallet unit GCash. Globe has already received an equity share of P3.7 billion from GCash in the first half of the year, accounting for 28 percent of the company's pre-tax profit. Additionally, Globe has seen a 6 percent increase in revenue to P60.4 billion as of June, despite a profit decline of 11 percent to P11.04 billion.

The decline in profit was attributed to a non-cash accounting element, as Globe booked an 11-percent drop due to its reduced stake in GCash to accommodate Mitsubishi Corp.'s investment. However, the telco spent P26.3 billion on capital expenditures, which increased its debt-to-equity ratio to 2.25 times. Despite this, Gaite emphasized that Globe remains one of the most consistent blue chip companies in the Philippine Stock Exchange, offering investors a quarterly dividend of P25 per share, which yields an annual return of 6 percent.

Both Gaite and H.E. Bennett Securities Inc. market strategist Joel de la Peña believe the market is undervaluing Globe's loan book, and investors can capitalize on this by purchasing the stock at its current discounted price.