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| Potential Impact of this News | POSITIVE on the stock price |
| Company | Globe Telecom, Inc. |
| Stock Code | GLO |
| Long-term Recommendation on the Stock | Buy |
| 1-Year Target Price | PHP 2,689.32 |
Globe Telecom disclosed last week that Japanese banking giant Mitsubishi UFJ Financial Group (MUFG) has bought into Globe Fintech Innovations, Inc. (Mynt), the parent company of Gcash, at a transaction price that would value Mynt at $5 Billion.
4th most valuable private financial entity
A $5 Billion valuation would rank Gcash as the 4th most valuable private financial entity in the Philippines, slightly behind Metrobank (MBT)’s P305.8 Billion market cap and way ahead of UnionBank (UBP)’s P119.4 Billion.
This is a big jump from our last reference point of Mynt’s valuation at $2 Billion, which was when it conducted a funding round in 2021. According to GLO, MUFG will be taking an 8% stake in Mynt, with AC’s AC Ventures Holdings increasing its stake by 8% at the same valuation.
Start of possible collaboration between MUFG and Ayala Group
MUFG’s entry will be done via a mix of primary and secondary issuances, the details of which are yet to be disclosed as of writing. A MUFG executive will sit on the board of Mynt, while also seeking to collaborate directly with Mynt’s largest shareholder, the conglomerate Ayala Group, hoping to take advantage of its financial services and MUFG’s customer base.
It is not immediately clear what will be GLO’s ownership post-transaction. However, assuming a 50/50 primary/secondary split and that GLO would not be a selling party, we estimate the resulting dilution would bring GLO’s stake down from 36.0% to 33.3%.
GLO a Strong Buy
At an exchange rate of P58.00/USD, the deal would value GLO’s stake at P96.7 Billion. For reference, GLO’s investment in Mynt was logged in its 1st quarter 2024 Balance Sheet as P12.5 Billion, which we estimate the market value to be worth P19.8 Billion. The difference between this estimate and the new valuation would result to an additional value of P532.40 per share.
If our assumptions, then the additional value of P532.40 per share would yield a revised Target Price of P2,689.32 for GLO, a 24.4% upside from its last traded price of P2,162.00. As such, we rate GLO a STRONG BUY following this deal.
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