AP Securities weighs DITO CME’s upcoming share sale

DITO CME Holdings announced a broad price range for its follow-on share sale to fund network expansion, aiming to gain market share from PLDT and Globe.

The parent company of DITO Telecommunity plans to offer up to 1.95 billion shares at P1-2.15 each, according to AP Securities, which covered the analysts' briefing for the deal.

Timeline

The shares will be priced on Aug. 14, 2024, while the formal offer period will run from Aug. 19-27, with a target listing date of Sept. 3, 2024.

Depending on where the price lands, DITO CME can raise P1.95 billion to as much as P4.2 billion from the offer.

This is critical for its modern network, given its rapid growth over the past two years, AP Securities senior research analyst Francis Ferdinand Subido highlighted in a report on Wednesday. 

Francis Ferdinand Subido
​AP Securities Senior Research Analyst 

Huge debts

However, a major obstacle is the company’s profitability goal and its huge debts.

“While management has reiterated that the telco business naturally involves heavy initial fixed costs and that these have already been frontloaded, heavy leverage levels still warrant concern given that this could continue to impede DITO’s ability to generate positive free cash flows down the line,” Subido said.

The bottom line

The stockbrokerage house used various metrics to evaluate DITO CME’s offer and found the price, even at the low end, too expensive compared to its domestic peers. However, valuations were roughly in line with PLDT and Globe, when judged by revenues.

Therefore, Subido does not recommend buying the offer unless investors are “willing to speculate on a first-day pop.”

“There may be opportunities to capitalize on price fluctuations, however, given the small size of the offer,” he added. 

Financial market recommendations and comments on InsiderPH News belong solely to the analysts and institutions making them. They do not represent buy, sell or hold recommendations of InsiderPH News. Investments held by analysts or institutions may influence their recommendations. Investors should conduct their own research and carefully evaluate all relevant market information before making investment decisions. As always, the past performance of any investment does not guarantee its price appreciation in the future.

About the author
Miguel R. Camus
Miguel R. Camus

Miguel R. Camus has been a reporter covering various domestic business topics since 2009.

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