GCash seeks catalyst after rocky PSE start

GCash operator Mynt Inc.’s early stock market slump has made its shares more attractive, but stronger earnings could be needed to drive a recovery, according to COL Financial chief equity strategist April Lee-Tan.

Tan said the company’s fundamentals remained strong despite the pullback, pointing to COL’s P8-per-share target price in its initiating coverage report.

“If it was already attractive at P6.60 based on that report, it’s now more attractive because it’s cheaper,” she said.

Shares of GCash operator Mynt Inc. closed at their P6.60 initial public offering (IPO) price on their Oct. 20 debut on the Philippine Stock Exchange (PSE).

They subsequently weakened, ending both Oct. 23 and Oct. 26 at P6.27, or 5 percent below the offer price.

The stock hit an intraday low of P5.95 on Oct. 26, putting it as much as 9.85 percent below its initial IPO price.

It has since recovered those losses. Mynt closed at P6.61 on Oct. 30, slightly above its offer price, although it fell 1.20 percent during that session.

Trading reached P155.90 million across 23.53 million shares.

Tan said investors should watch the company’s upcoming financial results for a catalyst that could support the stock.

“For the price to go up, I guess we need to see if the earnings in the next few quarters continue to show strong growth,” she said.

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She cited past annual revenue growth of around 40 percent and profit growth of about 60 percent.

COL’s forecasts are more conservative, projecting profit growth of 18 percent this year and roughly 20 percent next year, according to Tan.

Results exceeding those assumptions could give the shares room to rise, she said.

“So if earnings actually grow faster than that, then I think there is room for GCash to recover from its slump that we’re seeing right now,” Tan said.

For investors confident in GCash’s long-term prospects, she said the pullback presented a buying opportunity.