OUTLIER: SM Prime Holdings, Inc.

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SM Prime Holdings, Inc. currently has 77 malls in the Philippines and China.

By Christine Joyce S. Castañeda, Senior Researcher

SM Prime Holdings, Inc. (SMPH) was the most actively traded stock in the local bourse last week with analysts pointing to the rebalancing of a global equity index that reduced the stock’s weight and the spillover effects among emerging markets brought by the Turkish lira crisis.

SMPH had the highest value turnover last week, with P1.591 billion worth of 43.693 million shares exchanged hands on the trading floor from Aug. 13 to 17, data from the Philippine Stock Exchange showed.

Shares closed at P36 apiece on Friday, up P0.60 or 1.69% from the previous day, but lost 6.49% week on week. For the year, it is down 4%.

“I believe the main reason… was because of the quarterly MSCI Philippines [Index] rebalancing held last Aug. 13 where it received a slight down weight rating together with ALI (Ayala Land, Inc.),” said Unicapital Securities, Inc. certified securities representative Cristopher Adrian T. San Pedro.


The rebalancing saw the index weights of ALI and SMPH at the MSCI Philippines Standard index decrease by 0.002% and 0.003%, respectively, while those of Alliance Global, Inc. and Jollibee Foods Corp. increased by 0.016% and 0.003%.

Meanwhile, the Philippines saw its index weight in the MSCI Emerging Markets index decrease by 0.007%. The MSCI world equity index tracks large and mid-cap equity performance across 23 developed markets. The index covers approximately 85% of the country’s stock universe.

For Regina Capital Development Corp. Managing Director Luis A. Limlingan, the stock’s earnings were in line with most views.

“However, SMPH’s share price is just being pulled down because of the Turkey contagion,” he said.

The continued fall in the Turkish currency, the lira, has caused panic among investors and has spread to other emerging markets. The fall was attributed to soaring inflation, economic mismanagement, and tensions with the United States.

Going forward, analysts expect SMPH to at least match its net income target for the year.

Mr. Limlingan said the company’s net income could reach P34.5 billion this year. “… [F]or the retail business, this may pick up because of some early spending brought about by elections next year,” he said.

For his part, Mr. San Pedro expects SMPH’s net income this year to reach P32 billion — matching the company’s target — citing the increasing mall revenues from ongoing provincial expansions and the increase in demand for residential properties due to the “promising” influx of foreign residents, particularly from China.

“I’m cautiously optimistic on SMPH given the challenges of inflation which yet has to peak in the upcoming months,” said Unicapital’s Mr. San Pedro.

“[B]ut on the brighter side, the consistency to have a double-digit growth (year-on-year) amidst the global and local uncertainties proves that SMPH’s is among the resilient stocks in the Philippines stock market,” Mr. San Pedro added.

The company’s consolidated net income rose 15.68% to P9.209 billion in the second quarter, its disclosure showed. For the first half, the company saw its net income grow by 15.30% to P16.957 billion, buoyed by mall expansion in provincial areas and higher demand for high-rise residential properties.

Under its five-year plan that was unveiled in 2013, the holding firm for Henry Sy, Sr.’s property investments targeted to double its 2013 P16.3-billion net income and P59.8-billion revenue by this year.

SMPH currently has 77 malls — 70 in the Philippines and seven in China. Two more malls are scheduled to open this year: SM City Legazpi in Albay and SM Center Ormoc in Leyte.

Mr. Limlingan gave SMPH an initial price support of P34 followed by P32.80 and resistance levels of P38 and P39.50.

For his part, Mr. San Pedro pegged the stock’s support at P34 and resistance at P39.50 in the short term with a target of P42 and P44 in the medium term.