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Summary of Broker’s Recommendation
| Stock Code | TEL |
| Company Name | PLDT Inc. |
| Broker | AP Securities |
| Opinion Issued on | 14 Nov 2024 |
| Recommendation | Buy |
| 1-Year Target Price | PHP 1,770.57 |
We continue to expect stable revenues from TEL, with the higher likelihood of better performance in the next quarters as moderating inflation free up household budgets for telco services and as demand for mobile data grows further. The Individual and Enterprise segments will likely continue to do the heavy lifting for its revenues as the legacy services from the Home segment continue to decline.
One bright spot for Home is fiber services, although this could be tempered by intensifying competition in the segment. The prospect of a profitable Digital Banking business, along with additional cash flows from the actualization of tower sales and the proposed sale of part of its data center business, would increase the attractiveness of TEL for investors.
With this in mind, TEL’s slight earnings beat, and the telco’s ability to meet its guidance on reductions in capex and opex to deliver positive free cash flow, leads us to maintain our BUY rating for TEL with a Target Price of P1,770.57/share.
Analysis and Opinion
TEL beats estimates, slightly above 5%
TEL earnings were slightly above consensus estimates for 9-months (9M) 2024 and the 3rd quarter (3Q) 2024 by 6.9% and 5.5% respectively. The flattish 9M 2024 earnings was underpinned by steady mobile data and fiber revenues (Home and Enterprise), and more robust growth from enterprise services. Mobile data revenues were up 5% year-on-year (YoY) at P55.2-Billion from last year’s P52.4-Billion, while this year’s 3Q Home and Enterprise fiber revenues posted steady YoY growth of 6% and 8% respectively. Lastly, enterprise solutions was boosted by cloud technology service revenues (+9% YoY), cybersecurity service (+59% YoY) and managed IT services (+250% YoY).
Earnings on track to meet P35-Billion 2024 guidance
TEL’s slight outperformance against consensus estimates, despite operating in a mature and tightly competitive industry, shows the company can meet, or even surpass, its 2024 earnings guidance of P35-Billion. This comes as the Individual (+2.5% YoY) and Enterprise (3.7%) segments maintain steady growth, somewhat offsetting the weakness from its legacy business segments.
Maya ready to take flight next year
During the Analyst Briefing, management mentioned that Maya could break even or even reach profitability by year-end 2024. Management provided further guidance that Maya could sustain profitability for the whole year of 2025. With that said, Maya remained in the red albeit its losses shank by 53% YoY in 9M 2024 to P900-Million. We do not discount the probability of Maya attaining profitably next year, but given the still massive losses on Maya’s books as of September, we take management guidance of break-even by year-end with a grain of salt.
Deal or no deal
Earlier this year, there were reports of ongoing talks between TEL and NTT for the potential sale of a stake in TEL’s data center subsidiary. In the recent briefing, it was confirmed that discussions are still ongoing and could possibly be accomplished by the mid-2025; of course, this is still subject to the approval of the PCC. As for TEL’s
tower sales, the company is still in the process of trying to sell majority of the towers which includes existing contracts. TEL aims to close 90% of deals on tower sites this year but its full accomplishment could most likely extend until next year.
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