By Mariedel Irish U. Catilogo, Researcher
SHARES in SM Prime Holdings, Inc. moved downward as investors unload their shares in the real estate developer ahead of the scheduled Morgan Stanley Capital International (MSCI) rebalancing and negative market sentiment.
The Sy-led property firm was the most actively traded stock last week in terms of value turnover, with 54.36-million shares worth P1.85 billion exchanging hands from May 22-26, data from the Philippine Stock Exchange showed.
SM Prime’s share price closed at P34.00 per share on Friday, down by 0.1% from its closing price of P34.05 on May 19. Year to date, the stock went down by 4.2%.
In an e-mail, Regina Capital Development Corp. Equity Analyst Jemimah Ryla R. Alfonso attributed the drop of SM Prime’s stock to investors beginning to sell their shares in the property developer ahead of the MSCI rebalancing on May 31.
“[SM Prime] is on a down weight by an estimated amount of around $79 billion. So basically, what will happen is foreign funds are forced to buy or sell according to the ‘rebalancing’ or the MSCI flows,” Ms. Alfonso said.
The down-weighted stocks are expected to earn negative returns in MSCI, an index designed to measure the performance of large and mid-cap segments of the Philippine market. It currently covers 15 stocks in the country, which equates to 85% of the local equity market.
“[The country’s ] inflation — albeit easing — remains elevated. This has led to a slowdown in consumer spending as ‘revenge spending’ wanes and could hurt SM Prime’s retail business,” Global Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
He also said the overall market sentiment was negative as the Philippine Stock Exchange index declined by 2.02% week on week, which could have dragged down SM Prime’s share price.
Headline inflation eased for a third straight month in April to 6.6%, slower than the 7.6% seen in March. For the January-to-April period, inflation averaged 7.9%, higher than the 3.7% in the previous year.
Despite the negative performance and several factors surrounding the company’s stock last week, analysts remain optimistic as the property developer shows significant progress in the sector.
“Any plans of SM Prime to open new malls is a major driver of growth for the company. This will help SM Prime grow its already dominant position in the retail market space even further,” Mr. Arce said.
On May 19, SM Prime opened its 83rd mall in the country located in Bataan City, making it the first SM mall in the province. This will add about 46,000 square meters of gross floor area to the company’s mall portfolio, providing two floors of shopping, dining, and entertainment options.
“The company also plans to expand its portfolio of properties in the coming years. This expansion is expected to create new growth opportunities for SM Prime,” he added.
SM Prime’s businesses include property and real estate, mall development and operations, office and commercial businesses, retail as well as hotels.
Its attributable net income in the first quarter amounted to P9.44 billion, up by 27.3% from the P7.51 billion recorded in the same period a year ago. Its gross revenues, meanwhile, grew by 20.6% to P29.2 billion from P24.2 billion previously.
Mr. Arce expects SM Prime’s net income to reach P8.2 billion in the second quarter of 2023, and P38.7 billion for this year.
“We see SM Prime’s bottom line to surge by a double-digit growth year on year for the second quarter just slightly above P9 billion. Likewise, we see a double-digit growth in its full-year earnings, just a bit below of P40 billion,” Ms. Alfonso said.
Mr. Arce pegged the stock’s support between P33.00 and P32.65 while placing its resistance at the range of P35.00 and P35.85.
Ms. Alfonso sees an initial resistance at the P34.00 level and support at P32.85.
