Earnings, growth plans lift SM Investments’ shares

SM Investments Corp. shares rose last week as investors bet on its 2023 earnings results and growth plans.

Data from the Philippine Stock Exchange showed that a total of 2.13 million shares, worth P1.98 billion, were traded from Feb. 26 to March 1, making it the sixth most actively traded stock in the local bourse last week.

Shares in the Sy-led conglomerate rose by 3.2% week over week to P937 per share on Friday from its P908 finish on Feb. 23. Since the start of the year, its share price has also increased by 7.5%.

“SM Investments has announced its venture into the data center sector, capitalizing on the increasing demand for storage driven by the prevailing AI trend,” Globalinks Securities and Stocks, Inc. Senior Trader Mark V. Santarina said in a Viber message.

He attributed last week’s trading performance to the company’s financial performance last year.

For 2023, SM Investments’ net income amounted to P77 billion, up by 25% from the P61.7 billion in the previous year.

The banking sector claimed the largest share of its earnings at 47%, followed by the property sector with 25% and the retail sector with 19%. Meanwhile, portfolio investments represented 9% of SM Investments’ full-year income.

Its consolidated revenues grew by 11% to P616.3 billion for the full year, driven by strong contributions from its portfolio investments and robust consumer spending.

Jemimah Ryla R. Alfonso, an equity analyst at Regina Capital Development Corp., said that positive sentiment from the US markets, as they await potential rate cuts from the US Fed, boosted local trading.

“Our outlook remains optimistic regarding the resilience of consumer spending, which lies at the heart of SM’s business. This is on the back of robust jobs data, indicating a strong foundation for consumer confidence,” she said in an e-mail.

“One angle that I am seeing that could affect the conglomerate negatively is the halt or suspension of the reclamation project. But overall, the broader market appears poised for a rally this year, fueled by expectations of rate cuts,” she added.

Looking back, SM Investments was ordered to halt its reclamation operations by the government following the suspension of all Manila Bay reclamation projects.

Despite the rosy outlook for the company, Mr. Santarina said potential challenges remained, as impacts driven by interest rates, inflation, and wage hikes could influence the overall market sentiment.

The Bangko Sentral ng Pilipinas (BSP) raised borrowing costs by 450 basis points from May 2022 to October 2023, bringing the policy rate to a nearly 17-year high of 6.5%.

Inflation eased to 2.8% in January, falling within the BSP’s target range of 2-4%.

“It is essential to look at the foreign capital inflows in the market, as they hold significant potential to positively impact SM. This company is particularly attractive to foreign investors placing bets on the Philippine market,” he said.

In a Viber message, Toby Allan C. Arce, Head of Sales Trading at Globalinks Securities and Stocks, Inc., gave his bottom-line forecast for SM Investments at P19.23 billion for the first quarter and P91.66 billion for the full year.

Ms. Alfonso of Regina Capital Development Corp. expects the company to record its first-quarter revenue at P162 billion and a net income of P21 billion.

For the week, Globalink’s Mr. Santarina pegged the stock’s support at P906 and resistance at P940.

“We are plotting our stronghold at P920.00, while resistance is at the P945.00 level,” Ms. Alfonso added. — Mariedel Irish U. Catilogo