SMIC shares gain amid buyback plan, market trends
SM INVESTMENTS CORP. (SMIC) shares climbed last week as investors took interest in its P60-billion buyback plan and broader market trends.
Data from the Philippine Stock Exchange showed that the Sy-led company was the seventh most active stock of the week, with 1.37 million shares worth P1.11 billion changing hands from March 3 to 7.
The company’s shares closed at P821 on Friday, 7.3% higher than the P765 closing price on Feb. 28. However, the close was 8.7% lower than the P899 closing price on Dec. 27, 2024.
On February 28, SMIC approved a buyback program of approximately $1 billion to improve the stock’s future earnings per share. It is the first buyback program in the company’s history.
“In the current market, we trade well below our historical valuation multiples, which do not reflect the performance and future growth potential of the Group,” said Frederic C. DyBuncio, president and chief executive officer of SMIC, in a statement.
“We always aim to create and return value to our shareholders. This program intends to do so by authorizing the buyback of up to approximately 6% of our outstanding shares,” Mr. DyBuncio added.
Jash Matthew M. Baylon, an analyst at First Resources Management and Securities, said the company’s shares were trading at a price-to-earnings (P/E) ratio of 11.70x when the buyback was announced, significantly below its five-year historical average P/E of 24.70x.
“The P60-billion buyback program is attractive, especially during market uncertainties, as it shows that the company is confident in its stock and performance despite the economic downturn,” said Mr. Baylon in a Viber message.
Meanwhile, Luis A. Limlingan, head of sales at Regina Capital Development Corp., said that buying sentiment for SMIC grew stronger.
“While investors might be linking the recent buyback program declaration to its recent price-action movements, the impact of the program has yet to weigh on the market, as no buyback transactions have been executed so far,” Mr. Limlingan said in an e-mail interview.
Mr. Baylon also said the buyback program signaled SMIC’s optimism regarding the economic outlook for the year, despite the index’s recent volatility and the threat of a global trade war.
“On a positive note, easing inflation in February, which could lead to monetary policy easing and robust consumption, may drive the local economy, benefiting our local stock market.”
“Considering that this is SMIC’s first buyback program, the company may be focused on strengthening its position in a competitive environment and managing its capital structure while continuing to meet demand in the real estate, retail, and banking segments,” Mr. Limlingan said.
In another press release, the company said it earned P86.2 billion in consolidated income in 2024, 7% higher than its P77-billion report in 2023, reflecting growth across all sectors.
The largest portion of SMIC’s total net income came from its banking segment at 49%, with property contributing 26%, retail operations providing 18%, and portfolio investments accounting for the remaining 7%, the press release showed.
SMIC also expanded its operations, adding 619 retail stores, two malls, and 75 bank branches in 2024.
“If these moves are executed effectively, SM could see enhanced investor confidence and a stronger market position in the long term,” Mr. Limlingan said.
“We also see that different business segments, such as SM Prime Holdings, Inc. (SMPH), have allocated higher capital expenditures for 2025, which will be used for project development and expansion,” said Mr. Baylon.
On February 24, SMPH announced in a press release that it will invest P100 billion in 2025, following “sustained growth in consumer demand and corporate activity.”
“We expect election-related spending, easing interest rates, and higher tourism spending to fuel our growth in 2025,” said SM Prime President Jeffrey C. Lim.
The parent company of SMPH is SMIC.
For the January-September period, SMIC’s revenues rose by 5% to P462.46 billion from P440.38 billion last year. Likewise, the company’s net income grew by 9% to P60.89 billion from P55.89 billion during the same period last year.
“We project that SM will grow around 9–10% to P90.2 billion in 2025, as robust spending — driven by manageable inflation, election-related expenditures, and a monetary policy easing cycle — may boost growth across its business segments,” said Mr. Baylon.
Mr. Limlingan pegged support for the stock at P810 and resistance at P830. Meanwhile, Mr. Baylon set support at P800 and resistance at P850. — Pierce Oel A. Montalvo