Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Converge ICT Solutions Inc / Equity Capital Markets

Converge ICT aims to raise around US$500+m in its Philippines listing.Converge ICT (CICT) is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions. It has a 54% market share as of Mar 2020, according to MPA. It also claims to be the fastest growing fixed broadband operator in both the residential and enterprise market.CICT owns and operates an end-to-end fiber network in the Philippines, with over 30,000 km of fiber as of Mar 2020. Its network covers 200 cities and municipalities across Luzon. As of Mar 2020, it reached approximately 4.1m homes.CICT’s revenue has grown at 69% CAGR over FY16-19, with growth being led by its residential business whose revenue has increased at 95% CAGR over the same time frame. Gross profit grew at 56% CAGR, EBITDA at 91% CAGR and Net profit at 60% CAGR. In other words, most of the revenue growth has flowed down to the bottom line. I have covered the company background and undertaken a peer comparison in my earlier reports, links to which are below. In this note, I’ll talk about earnings forecast and valuations.Links to my previous notes:<ul>
<li dir="ltr"><a href="https://www.smartkarma.com/insights/converge-ict-pre-ipo-fast-growth-low-penetration-covid-resistant" target="_blank" rel="noopener">Converge ICT Pre-IPO - Fast growth, low penetration, COVID resistant</a></li>
<li dir="ltr"><a href="https://www.smartkarma.com/compose/insight/43808/Converge%20ICT%20Pre-IPO%20-%20Peer%20Comparison%20-%20Not%20a%20Clear%20Cut%20Winner" target="_blank" rel="noopener">Converge ICT Pre-IPO - Peer comparison - Not a clear cut winner</a></li>
</ul>

Converge ICT aims to raise around US$500+m in its Philippines listing.Converge ICT (CICT) is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions. It has a 54% market share as of Mar 2020, according to MPA. It also claims to be the fastest growing fixed broadband operator in both the residential and enterprise market.CICT owns and operates an end-to-end fiber network in the Philippines, with over 30,000 km of fiber as of Mar 2020. Its network covers 200 cities and municipalities across Luzon. As of Mar 2020, it reached approximately 4.1m homes.CICT’s revenue has grown at 69% CAGR over FY16-19, with growth being led by its residential business whose revenue has increased at 95% CAGR over the same time frame. Gross profit grew at 56% CAGR, EBITDA at 91% CAGR and Net profit at 60% CAGR. In other words, most of the revenue growth has flowed down to the bottom line. I have covered the company background and undertaken a peer comparison in my earlier reports, links to which are below. In this note, I’ll talk about earnings forecast and valuations.Links to my previous notes:
Converge ICT Pre-IPO - Fast growth, low penetration, COVID resistant
Converge ICT Pre-IPO - Peer comparison - Not a clear cut winner


Converge ICT Pre-IPO - Thoughts on Valuation

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc" target="_blank" data-smartkarma-citation="entities:29215:1" rel="noopener">Converge ICT Solutions Inc (ITC PM)</a> is the only major pure-play fixed broadband provider, with an exclusive focus on serving the Philippine fixed broadband market. It is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions, with a 55% market share in 1H20, according to MPA. Converge has received regulatory approval for a listing on the main board of the Philippine Stock Exchange to raise $724.7 million (primary/secondary split of 32%/68%). The final offer price will be announced on 9 October and the IPO will run from 13-19 October. <div class="content-highlight">In <a href="https://www.smartkarma.com/insights/converge-ict-solutions-ipo-initiation-well-connected" target="_blank" rel="noopener">our initiation note</a>, we highlighted that Converge is a structural play on the increasing penetration rates of fixed broadband in the Philippines driven by the ongoing rollout of fibre network infrastructure to satisfy the pent-up demand. Since then, Converge has released an updated prospectus with 1H20 results and recent developments. Overall, the 1H20 results reinforce our view that Converge’s fundamentals are attractive.</div>

Converge ICT Solutions Inc (ITC PM) is the only major pure-play fixed broadband provider, with an exclusive focus on serving the Philippine fixed broadband market. It is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions, with a 55% market share in 1H20, according to MPA. Converge has received regulatory approval for a listing on the main board of the Philippine Stock Exchange to raise $724.7 million (primary/secondary split of 32%/68%). The final offer price will be announced on 9 October and the IPO will run from 13-19 October. In our initiation note, we highlighted that Converge is a structural play on the increasing penetration rates of fixed broadband in the Philippines driven by the ongoing rollout of fibre network infrastructure to satisfy the pent-up demand. Since then, Converge has released an updated prospectus with 1H20 results and recent developments. Overall, the 1H20 results reinforce our view that Converge’s fundamentals are attractive.

Converge ICT Solutions IPO: Making the Connection

Converge ICT aims to raise around US$500m in its Philippines listing later this year.Converge ICT (CICT) is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions. It has a 54% market share as of Mar 2020, according to MPA. It also claims to be the fastest growing fixed broadband operator in both the residential and enterprise market.CICT owns and operates an end-to-end fiber network in the Philippines, with over 30,000 kilometers of fiber as of Mar 2020. Its network covers 200 cities and municipalities across Luzon. As of Mar 2020, it reached approximately 4.1m homes.CICT’s revenue has grown at 69% CAGR over FY16-19, with growth being led by its residential business whose revenue has increased at 95% CAGR over the same time frame. Gross profit grew at 56% CAGR, EBITDA at 91% CAGR and Net profit at 60% CAGR. In other words, most of the revenue growth has flowed down to the bottom line.In my previous note, <a href="https://www.smartkarma.com/insights/converge-ict-pre-ipo-fast-growth-low-penetration-covid-resistant" target="_blank" rel="noopener">Converge ICT Pre-IPO - Fast growth, low penetration, COVID resistant</a>, I covered the company’s background and performance. In this note, I’ll compare it to some of its listed peers.

Converge ICT aims to raise around US$500m in its Philippines listing later this year.Converge ICT (CICT) is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions. It has a 54% market share as of Mar 2020, according to MPA. It also claims to be the fastest growing fixed broadband operator in both the residential and enterprise market.CICT owns and operates an end-to-end fiber network in the Philippines, with over 30,000 kilometers of fiber as of Mar 2020. Its network covers 200 cities and municipalities across Luzon. As of Mar 2020, it reached approximately 4.1m homes.CICT’s revenue has grown at 69% CAGR over FY16-19, with growth being led by its residential business whose revenue has increased at 95% CAGR over the same time frame. Gross profit grew at 56% CAGR, EBITDA at 91% CAGR and Net profit at 60% CAGR. In other words, most of the revenue growth has flowed down to the bottom line.In my previous note, Converge ICT Pre-IPO - Fast growth, low penetration, COVID resistant, I covered the company’s background and performance. In this note, I’ll compare it to some of its listed peers.

Converge ICT Pre-IPO - Peer Comparison - Not a Clear Cut Winner

<a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc" target="_blank" data-smartkarma-citation="entities:29215:1" rel="noopener">Converge ICT Solutions Inc (ITC PM)</a> aims to raise around US$500m in its Philippines listing later this year.Converge ICT (CICT) is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions. It has a 54% market share as of Mar 2020, according to MPA. It also claims to be the fastest growing fixed broadband operator in both the residential and enterprise market.CICT owns and operates an end-to-end fiber network in the Philippines, with over 30,000 kilometers of fiber as of Mar 2020. Its network covers 200 cities and municipalities across Luzon. As of Mar 2020, it reached approximately 4.1m homes.CICT’s revenue has grown at 69% CAGR over FY16-19, with growth being led by its residential business whose revenue has increased at 95% CAGR over the same time frame. Gross profit grew at 56% CAGR, EBITDA at 91% CAGR and Net profit at 60% CAGR. In other words, most of the revenue growth has flowed down to the bottom line.Although operating cash flows haven’t kept up with EBITDA growth over the past few years. Furthermore, the company still plans to invest a lot more funds in order to expand its network further which might entail more capital raisings down the line. In addition, there are some related party issues as well.

Converge ICT Solutions Inc (ITC PM) aims to raise around US$500m in its Philippines listing later this year.Converge ICT (CICT) is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions. It has a 54% market share as of Mar 2020, according to MPA. It also claims to be the fastest growing fixed broadband operator in both the residential and enterprise market.CICT owns and operates an end-to-end fiber network in the Philippines, with over 30,000 kilometers of fiber as of Mar 2020. Its network covers 200 cities and municipalities across Luzon. As of Mar 2020, it reached approximately 4.1m homes.CICT’s revenue has grown at 69% CAGR over FY16-19, with growth being led by its residential business whose revenue has increased at 95% CAGR over the same time frame. Gross profit grew at 56% CAGR, EBITDA at 91% CAGR and Net profit at 60% CAGR. In other words, most of the revenue growth has flowed down to the bottom line.Although operating cash flows haven’t kept up with EBITDA growth over the past few years. Furthermore, the company still plans to invest a lot more funds in order to expand its network further which might entail more capital raisings down the line. In addition, there are some related party issues as well.

Converge ICT Pre-IPO - Fast Growth, Low Penetration, COVID Resistant

<a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc" target="_blank" data-smartkarma-citation="entities:29215:1" rel="noopener">Converge ICT Solutions Inc (ITC PM)</a> is the only major pure-play fixed broadband provider, with an exclusive focus on serving the Philippine fixed broadband market. It is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions, with a 54% market share in 1Q20, according to MPA. Converge is backed by Warburg Pincus which has a 29% stake. Converge is aiming to raise up to $730 million by listing on the main board of the Philippine Stock Exchange on 26 October.<div class="content-highlight">Converge is a structural play on the increasing penetration rates of fixed broadband in the Philippines driven by the ongoing rollout of fibre network infrastructure to satisfy the pent-up demand. Overall, we believe that Converge’s fundamentals are attractive.</div>

Converge ICT Solutions Inc (ITC PM) is the only major pure-play fixed broadband provider, with an exclusive focus on serving the Philippine fixed broadband market. It is the largest high-speed fixed broadband operator in the Philippines, by high-speed residential fixed broadband subscriptions, with a 54% market share in 1Q20, according to MPA. Converge is backed by Warburg Pincus which has a 29% stake. Converge is aiming to raise up to $730 million by listing on the main board of the Philippine Stock Exchange on 26 October.Converge is a structural play on the increasing penetration rates of fixed broadband in the Philippines driven by the ongoing rollout of fibre network infrastructure to satisfy the pent-up demand. Overall, we believe that Converge’s fundamentals are attractive.

Converge ICT Solutions IPO Initiation: Well Connected

Philippines

PLDT, Inc. is a leading telecommunications, internet, and digital service company in the Philippines. It provides a wide range of services, including fixed-line, wireless, and fiber optic communication solutions, broadband internet, and mobile telephony services through various brands like Smart and TNT. The company offers cellular mobile, ICT solutions, cloud computing, cybersecurity, data center services, and fintech solutions. PLDT is headquartered in Makati City, Philippines, and was founded on November 28, 1928.

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PLDT (TEL PM)

Converge ICT Pre-IPO - Thoughts on Valuation

Converge ICT aims to raise around US$500m in its Philippines listing. Converge ICT (CICT) is the largest high-speed fixed broadband operator in...

Sumeet Singh

Converge ICT Solutions IPO: Making the Connection

Converge ICT Solutions Inc (ITC PM) is the only major pure-play fixed broadband provider, with an exclusive focus on serving the Philippine fixed...

Arun George

Converge ICT Pre-IPO - Peer Comparison - Not a Clear Cut Winner

Converge ICT aims to raise around US$500m in its Philippines listing later this year. Converge ICT (CICT) is the largest high-speed fixed...

Sumeet Singh

Converge ICT Pre-IPO - Fast Growth, Low Penetration, COVID Resistant

Converge ICT Solutions Inc (ITC PM) aims to raise around US$500m in its Philippines listing later this year.Converge ICT (CICT) is the largest...

Sumeet Singh

Converge ICT Solutions IPO Initiation: Well Connected

Converge ICT Solutions Inc (ITC PM) is the only major pure-play fixed broadband provider, with an exclusive focus on serving the Philippine fixed...

Arun George

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