Stock Commentary: Converge’s FY21 net profit rises 111% to 7.2 billion pesos

Converge [CNVRG 28.65 2.87%] https://www.philstar.com/business/stock-commentary/2022/04/11/2173819/converge-2021-net-income-surges-111-p72-billionthe fiber optic broadband internet service provider founded by Dennis “Pampanga Dennis” Uy, saw its net profit rise 111% to 7.2 billion pesos, from 3.4 billion pesos in FY20 thanks to a “deepening” of its presence in the areas of coverage and expansion into new areas of coverage.

Residential ARPU (average revenue per user) increased from P1,298 in 2020 to P1,353 in 2021, and overall residential segment revenue increased by 83%. CNVRG’s other segment, the “enterprise” segment, grew by 11%, largely due to the introduction of new service products such as “WFH Connectivity Solutions”.

Monthly ARPU in this segment increased from P23,809 to P8,786; CNVRG attributes the huge decrease to a higher number of “multi-site branches” signing up, as well as a temporary increase in the number of “low-bandwidth” packages sold to accommodate WFH, than the CNVRG describes as “inferior ARPU products”. ”. The number of residential subscribers increased by 96% to reach 1,038,321 as of December 31, 2021.

The CNVRG said it plans to increase that number to 2.4 million by the end of this year.

MB RESULTS

This company is absolutely killing it and its growth doesn’t seem to be slowing down at all.

The massive interest in CNVRG’s recent 10 billion peso bond sale tells us that the financial community sees CNVRG as a long-term safe bet, which seems logical given the company’s performance so far. here.

The founder and owner of CNVRG, the man who goes by “@TheFiberMaster” on Twitter, executed his company’s growth strategy with a very sustainable mix of equity (private investment, IPO) and debt ( loans, bonds), and a fairly good balance between rapid expansion (opening new territories with capex) and improving existing services (building the Mindanao redundancy loop to improve service availability).

The Philippines has a large number of potential broadband customers, but our geography and associated economy make it difficult for a large portion of the population to connect. It will be interesting to see how long CNVRG can continue to grow its top line and bottom line at the same time.

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Merkado Barkada’s opinions are provided for informational purposes only and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor should do their own due diligence before trading, as the facts and figures in each particular article may have changed.