DITO’s shares surge amid telco sector optimism

Optimism towards the telecommunication sector boosted the shares of Dito CME Holdings Corp. by 37.14 percent week-on-week.

The shares of the listed holding company of third telecommunications player, Dito Telecommunity, climbed 46 centavos or 8.68 percent to P5.76 apiece on Friday.

In turn, Dito ended the previous trading week as the most active stock and landed itself among the top gainers.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco said Dito’s shares were actively traded last week, which could be attributed to the optimism towards the telecommunication sector.

The telecom industry is seen to be at an advantageous position as the “new normal” ushered in by the coronavirus disease 2019 (Covid-19) global pandemic caused a shift of much of economic activity to the digital space.

“One of those who can take part in the opportunities is the third telecommunications player Dito Telecommunity, whom Dito CME Holdings Corp. will have indirect interest in upon regulatory approval and execution of transfer documents,” Tantiangco told The Manila Times.

AAA Equities head of research Christopher Mangun said Dito’s shares performed “exceptionally” the past week as it saw heavy volatility and was the most traded stock for several days.

Mangun also noted that the strength of the telecommunications sector cascaded to the stock, despite it not operating yet or beginning to earn revenues.

He sees the firm’s shares to continue trading higher as it is in a strong uptrend and more investors are “getting on the ship.”

Tantiangco, on the other hand, said Dito’s shares might experience profit-taking moving forward.

“The 37.14-percent week-on-week surge is a steep rally in a short period of time. At the same time, Dito’s share is already in the overbought territory as per its relative strength index. So, we may see a decline moving forward caused by profit-taking,” he explained.

Both analysts agree the telecommunication industry is well-positioned for further growth as demand for data services continues to shoot up amid economic activities going online.

“The telco sector has outlasted the negative effects of the pandemic and may continue to be an outlier [until] the end of the year. The second-line telco companies may continue to be speculated as the government continues to pressure the current duopoly for better service,” Mangun said.

Tantiangco said opportunities for the sector should be maximized and should translate to the companies’ financials.

“The opportunities and advantages of translating to better corporate results is still seen to be one of the key factors in sustaining the optimism. With this, investors are expected to look towards the financial reports, with the third quarter results being the most immediate, for clues,” Tantiangco continued.

He added that sustaining Dito’s climb would depend on the developments of Dito Telecommunity, which is still preparing for its service launch.