stock analysis of pldt company

Stock overview of

Philippine Long Distance Telephone Company (TEL)

Ron Jason Aborita 2015 April

CONTENTS

I. Company Profile

II. Relevant Data

III. Relevant News

IV. Recommendations

COMPANY PROFILE

Ron Jason Aborita 2015

COMPANY PROFILE PLDT is the leading telecommunications service provider in the Philippines. PLDT is listed on the Philippine Stock Exchange (PSE:TEL and its American Depositary Shares are listed on the New York Stock Exchange (NYSE:PHI . PLDT has one of the largest market capitalizations among Philippine-listed companies.


THE BIRTH OF PLDT

A typhoon ravaged the country on November 28, 1928 The ability to communicate amongst loved ones and across the country became crucial. It was under this scenario that the law was signed giving birth to PLDT. What the new law hoped to achieve was to interconnect "intercom" systems into a seamless nationwide network that would facilitate communication and delivery of services to the people

Trivia: Americans were the first owners of PLDT.

Credit Rating

The Credit Rating and Investors Services Philippines, Inc (CRISP assigns:

Credit Rating: AAA Debt rated 'AAA' reflects strongest capacity to repay debt obligations.

Outlook: Stable

*As of January 06, 2014


DOMINANT MARKET LEADERSHIP Based on available information, PLDT enjoys : 67% share in the Wireless Market Segment

with 72 Million wireless subscribers out of the countrys 109 million subscribers

69% share of subscribers in the Fixed Line Market with 2 million out of 3 million fixed line subscribers

64% share of subscribers in the Broadband Market Segment with 3.3 million subscribers out of the 5.2 million


DOMINANT MARKET LEADERSHIP PLDT leads the wireless race

PLDT operates the premier satellite company Cignal

PLDT dominates the landline domain Prepaid market comprises 82% of PLDT's mobile revenues


STRONG HISTORICAL FINANCIAL PERFORMANCE Current: EBIDTA 55% & Income Margin 24%

PLDTs consolidated financial performance remained healthy over the last five years. For the next 5 years, EBITDA is expected to continue to grow with EBITDA margins averaging at about 48% for the next 5 years.


STRONG RISK MANAGEMENT PLDT Boards creation of its Group Enterprise Risk Management Department will address existing and emerging risks to its business crucial in maintaining an organizations competitive position

RELEVANT DATA


STOCK QUOTES As of April 13, 2015: Market Capitalization: 642,117,763,300.00 Issue Type: Common Outstanding Shares: 216,055,775

Last Traded Price

2,940.00 Open 2,972.00

Change(% Change)

down ( 1.08%)

High 2,972.00

Value 664,651,560.00 Low 2,938.00

Volume 225,980 Average Price 2,942.26

52-Week High 3,486.00 52-Week Low 2,744.00

1 year Traded Price Graph (April 2014 April 2015)

There is a suggested seasonal growth pattern. Recommendation: Buy stock on June, Sell at start of September

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at December 31, 2014 and 2013 (in million pesos)

2014

TOTAL ASSETS 436,295

TOTAL EQUITY 134,668

TOTAL LIABILITIES 301,627

TOTAL EQUITY AND LIABILITIES 436,295

*summarized data

INCOME As at December 31, 2014 and 2013 (in million pesos)


We can characterize TEL to be steadily growing over the long-term: CONSOLIDATED SERVICE REVENUES OF P165.1 BILLION, 1% HIGHER OVER 2013 CONSOLIDATED DATA AND BROADBAND REVENUES RISE 20% TO P31.9 BILLION PLDT GROUP SUBSCRIBER BASE NOW OVER 76.0 MILLION CELLULAR SUBSCRIBER BASE AT 70.0 MILLION POSTPAID CELLULAR SUBSCRIBER BASE RISES 16% FROM YE2013 TO 2.8 MILLION TOTAL BROADBAND SUBSCRIBERS AT OVER 4.0 MILLION, UP 19% FROM YE2013 DIVIDEND PAYOUT OF P156 PER SHARE, REPRESENTING 90% OF 2014 CORE EARNINGS -PLDT has very high dividend payouts compared to other companies. It should be noted That we should consider TELs dividend payouts when comparing profits.

TEL HAS CONSISTENT HIGHEST DIVIDEND YIELD

RELEVANT NEWS

INTERNET AND

BROADBAND


THE RAPID GROWTH OF INTERNET PLDT executive vice president ,Ariel Fermin, predicts the total number of devices, including personal computers (PCs), internet access devices (IADs), and tablets in the country will reach more than 45 million by 2016. Households with broadband access in the country is expected to register an annual compound growth rate (ACGR) of 7.3 percent over the next five years, with the number of homes with broadband connection reaching 2.4 million by 2016. (According to IDCs WW New Media Market Model, 1H12: Worldwide and US Data report published in September last year.)


THE TREND OF BROADBAND In the meantime the most encouraging news has been the increased interest in broadband services, with the major players in the local telecom market starting to invest heavily in the expansion of broadband access. Around 80% of all internet connections were already broadband. Low broadband penetration (only 7% of the population)


THE TREND OF BROADBAND The PLDT Group cornered almost 60 percent of total broadband subscribers in the country. We are pleased to see that the PLDT Group remains the preferred broadband provider in the country - (PLDT) President and CEO Napoleon L. Nazareno

ALSO, PLDTs BROADBAND SUBSCRIBERS ARE CONTINUALLY INCREASING SO

BROADBAND WILL SIGNIFICANTLY CONTRIBUTE TO REVENUES


STAGNANT FIXED LINE The countrys fixed-line subscriber penetration has remained essentially stagnant .

fixed-line teledensity stood at just over 3% in 2014 The fixed-line market had effectively lost direction, with no growth expected in the short to long term.

PLDTs highest market share is on FIXED LINE with 69% share of the market. Expect revenues to lag over the long term due to stagnation.

COMPETITIONS


LOSING BATTLE IN POSTPAID Globe dominates postpaid market with double-digit growth in revenues. As of end-March 2014, postpaid revenues have reached P7.0 billion, up 18% from P6.0 billion in the previous year. Postpaid segment corners 38% of total Globe mobile revenues In the same period, postpaid subscribers totaled 2.09 million, up 12% from previous year's

PLAN TO INCREASE

CAPITAL


CAPITAL EXPENDITURES PLDT spent over P34.8 billion in capital expenditures in 2014, as it expanded its fiber network to nearly 100,000 kilometers, making it the most extensive, robust and resilient network in the country. In anticipation of greater data usage, PLDT is planning to spend another P39 billion in capital investments this year.

I see this as growth for PLDT that would be felt significantly on the Long term but not on the short term.


DATA CENTER CONSTRUCTION PLDT, through its wholly-owned ICT subsidiary ePLDT, is expanding its data center footprint with the construction of a P1-billion state-of-the-art facility located in Makatis central business district. It is set to be completed by fourth quarter of this year. It will largely cater to the colocation and other data center service requirements of large corporations

This would indirectly influence stock growth of TEL in the 4th quarter of 2015. But may be felt on 2016 instead

RECOMMENDATIONS

TEL IS OVERBOUGHT

TEL & EMP are overbought.

SELL TEL FOR NOW, THEN WAIT FOR RECOVERY

DIVIDEND YIELD

Dividend yields tend to be erratic and seasonal in the short term but has an increasing linear trend over 3 years

1 YEAR 3 YEARS

SEASONAL TREND (Exponential Moving Average 3-Year)

If we factor seasonal component, TEL stocks tend to rise from April-September (Q2-Q3) Then starts to dip October to January (Q4-Q1).

SEASONAL TREND

This seasonal component is supported by the momentum graphs 2014-2015 2011-2015

RECOMMENDED STRATEGY

TEL goes sideways but with upward bias. It is good to just hold onto it and depend on dividends for the earnings. Hold first up to October 2014, then buy this year around Oct-December if it starts downtrend starting September. (because it may remain inexpensive in Q4) TEL is poised to grow in 2016, hold on the stock on 2016 then sell on September or Before Q4.

PROS AND CONS

PROS: -Long-term investment -High dividend yields offset downturns in price -Robust growth in market share -Robust against oil & other energy volatility -Invests heavily in capital (LTE networks & Fiber optics)

CONS: -Chance to get dragged in stagnation. (always in balanced up and downs) -Sideways -Cant appreciate short-term growth -Overbought

RESOURCES

http://www.bloomberg.com/research/stocks/charts/charts.asp?ticker=TEL:PM

http://www.pinoymoneytalk.com/top-10-stocks-with-high-dividend-yield/

http://www.businessmirror.com.ph/pldt-expanded-market-share-to-60-last-year/

http://www.philstar.com/business/2013/01/14/896530/pldt-take-advantage-rapid-growth-internet-access

http://pldt.com/docs/default-source/press-releases-2014/read-more.pdf?sfvrsn=0

http://www.pldt.com/about-us/company-timeline http://www.pldt.com/docs/default-source/press-releases---

financial-results/pse_sec_press-release_03-03-15.pdf?sfvrsn=0

stock analysis of pldt company

Documents

birth of pldt

company profile pldt

owners of pldt

wireless race pldt

wireless subscribers

share of subscribers

wireless market segment

fixed line market