CNVRG reported Php3.0Bil in net income for 1Q25, up 18.3% y/y and in line with both COL (23.5%) and consensus (23.5%) estimates. This was primarily due to an improvement in revenues underpinned by slower cost of services growth (+10% y/y) as well as lower finance costs (-14% y/y). In particular, revenues amounted to Php10.8Bil (+13.2%) in 1Q25, in line with COL (23.1%) and consensus (23.5%) estimates. Note that CNVRG’s 1Q revenues typically represent 21.9% of the full year total. In terms of subscribers, CNVRG maintained the size of its quarterly net additions at 138,878 users. Per segment, Fiber X added ~46,000 new subscribers, while Surf2Sawa and BIDAFiber recorded ~70,000 and ~24,000 new users respectively.
Revenues driven by rapid growth across all segments. 1Q25 revenues amounted to Php11.0Bil, up 13.2% y/y and in line with COL (23.1%) and consensus (23.5%) estimates. This surge in revenues was driven by the higher contribution of both their residential and enterprise segments.
Lower finance costs offset the higher depreciation expense. During the period, CNVRG reported a 9.9% y/y increase in cost of services (COS) to Php3.7Bil. This increase was primarily driven by higher repairs and maintenance costs (+12.7% y/y) tempered by slower growth in depreciation under COS (+7.8%) expenses.
Updates on subsea cable projects. According to CNVRG, the Bifrost subsea cable project is progressing well, as final splicing of the submarine portal across all segments is expected to be completed by the end of June. Following this, the cable will be tested and is expected to be ready for service by the third quarter of this year.
Reiterate BUY rating on CNVRG. We currently have a BUY rating on CNVRG with an FV estimate of Php25.0/sh. We continue to like CNVRG for being a pure play on fiber broadband and for the rapid growth of its postpaid and prepaid subscriber base.
From COLFINANCIAL
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