PLDT seen to net P4.18B this year

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) is expected to post a P4.18-billion net income by the end of 2002, a 23 percent increase from last year’s P3.4 billion, given the strong company showing during the first half of the year.

ABN-AMRO, in a report, also projects PLDT’s earnings to jump to P6.14 billion in 2003, a 47 percent increase from the expected 2002 net income.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is projected to reach P45.14 billion this year and P48.9 billion next year as against P39 billion in 2001.

PLDT, during the first half of 2002, posted a consolidated net income of P2.8 billion, or double the P1.37 billion earned in the same period last year, with the growth driven mainly by wireless subsidiary Smart Communications, Inc.

Reacting to the company’s first half performance, ABN-AMRO said that PLDT has reported a solid set of results ahead of market expectations. "Investors may be concerned by the noticeable slowdown in cellular subscriber growth, but operational enhancement and refinancing progress should provide some sweetness," it noted.

The report also expects the company’s net to debt equity ratio to further improve it, however, expressed concern that the mobile phone market may be slowing much faster than anticipated. "As such, we have assumed that mobile growth levels flatten out much quicker than we had earlier assumed. This has resulted in our reduction of our target price from P550 per share to P500. At the current price levels, this still represents over 50 percent upside from current price levels," it noted.

ABN-AMRO maintained its buy recommendation on PLDT, saying that as the company has recently demonstrated its underlying operations are robust and capable of delivering fundamental expansion, the opportunity is attractive for investors that can take the risks.

It said that a number of overhangs still exist, including the current battle for management control of the company which threatens to drag on, the poor macro situations in the country which has shown no signs of any type of turnaround, government’s inability to cope with the situation, and the uncertainty in Latin America which now threatens the Philippines as well.

But it quickly added that these risks are well known and are likely to be priced into the company’s shares already.