SM PRIME Holdings, Inc. (SMPH) was one of the most actively traded stocks in the local bourse last week amid news of the possible comeback of its real estate investment trust (REIT) initial public offering (IPO).
The Sy-led property firm was the sixth actively traded stock last week in terms of value turnover, with 19.02 million shares worth P699.53 million exchanging hands from Feb. 20 to 23, data from the Philippine Stock Exchange show.
Financial markets were closed on Friday to commemorate the 37th anniversary of the EDSA “People Power” revolution.
SM Prime’s share price closed at P36.35 apiece on Thursday, down 1.8% from its closing price on Feb. 17. For the year, the stock went up by 2.4%.
Globalinks Securities and Stocks, Inc. Head of Electronic Trading Mark Crismon V. Santarina said investors found the news of the firm’s IPO REIT revival attractive.
“The upcoming SM [Prime] REIT listing is generating significant buzz in the Philippine stock market. As one of the largest REIT listings in the market, it presents an attractive opportunity for investors seeking exposure to real estate assets,” Mr. Santarina said.
If it pushes through, the IPO is said to raise $1 billion, possibly the biggest listing in the local bourse.
“The listing is expected to generate substantial market activity and could have a positive impact on the broader market sentiment. As such, investors are eagerly anticipating the listing’s debut and closely monitoring any developments,” Mr. Santarina said.
Further, the company’s 2022 earnings report was deemed “positive” by the firm.
SM Prime’s consolidated income jumped 38.1% year on year to P30.1 billion last year, driven by the continued collection of full mall rental fees.
SM Prime President Jeffrey C. Lim said in the press release that 2022 ended on a “positive note,” mainly due to better consumer spending in the last three months of the year.
Consolidated revenues went up 28.6% to P105.8 billion from P82.3 billion in the previous year. The report said a chunk of the revenues was from the mall business at P49.8 billion versus P24.1 billion in 2021.
“SM Prime has benefited from the reopening of the Philippine economy, which has resulted in better earnings. However, despite this positive development, the stock is currently experiencing a neutral sentiment among investors due to the high inflation in the country,” Mr. Santarina said.
He expects SM Prime to generate P5.5 billion in the first three months of the year. While for 2023, he projects the property developer to post P38.7 billion, or about 29% higher than last year.
But economic factors could dampen sentiments toward the property company in the near term, he said.
“Inflation continues to be a significant factor in the Philippine market, which could impact SM Prime’s earnings and the broader market sentiment. Investors should keep an eye on the latest economic data, including inflation rates, to assess the potential impact,” Mr. Santarina said.
Despite this, he still sees the stock as an “attractive investment option” because of the company’s strong fundamentals.
“While SMPH may experience a period of sideways trading in the short term, my long-term outlook for the stock remains bullish,” he added, referring to the company’s ticker symbol.
Mr. Santarina sees the stock’s support level at P35 and resistance at P39. — Ana Olivia A. Tirona
