SM Prime shares slip on MSCI rebalancing, market pressures

By Isa Jane D. Acabal, Researcher

SM PRIME HOLDINGS, INC. (SMPH) shares fell last week on Morgan Stanley Capital International (MSCI) rebalancing and weakness in the real estate sector, offsetting gains from stronger earnings and expansion plans, analysts said.

Data from the Philippine Stock Exchange (PSE) showed SM Prime was the ninth most actively traded stock from Feb. 16 to 20, with 28.18 million shares worth P594.79 million changing hands.

The stock closed at P20.95 per share on Friday, down 1.9% from P21.35 a week earlier. This decline was steeper than the property sector’s 0.2% week-on-week drop and the 1.3% gain in the benchmark PSE index (PSEi).

On a year-to-date basis, SM Prime shares have fallen 7.9%, underperforming the 4.2% decline in the property sector and the PSEi’s 6.8% growth.

Jervin De Celis, equity trader at The First Resources Management and Securities Corp., said the pressure on the stock is linked to MSCI rebalancing.

In its February 2026 Index Review, MSCI kept the MSCI Philippines Standard Index unchanged but added Apex Mining Co. and Maynilad Water Services, Inc. to the small cap index. The changes will take effect after the close of Feb. 27.

SM Prime is one of 11 constituents in the MSCI Philippines Standard Index, which covers the large- and mid-cap segments of the Philippine market. Fund managers monitor the index’s composition to adjust their portfolios.

“From Feb. 16 to 19, the stock has recorded over P140 million in net foreign selling as funds realign their holdings ahead of the Feb. 27 effective date,” Mr. De Celis noted.

“These adjustments often trigger significant passive outflows that are independent of company milestones like mall expansions,” he added.

In a press statement on Feb. 16, SM Prime reported a net income of P48.8 billion in 2025, up 7% from P45.6 billion a year earlier, driven by higher revenues in commercial property and disciplined cost management.

Meanwhile, its consolidated revenues reached P141.1 billion, slightly higher than P140.4 billion in 2024.

SM Prime President Jeffrey C. Lim said the company is setting its capital expenditure (capex) budget at P100 billion this year.

According to Mr. De Celis, SM Prime’s capex commitment signals that the company is “not flinching at the local macro headwinds.”

“This aggressive expansion narrative has established a psychological floor for the stock, somehow offsetting potential downside from flat revenues and the persistent foreign selling observed ahead of next week’s MSCI rebalancing,” he added.

For Unicapital Securities, Inc., Research Head Wendy B. Estacio-Cruz said SM Prime’s full-year 2025 performance “reinforces confidence in the company’s earnings visibility and execution consistency, underscoring the strength and stability of its core operations.”

Ms. Estacio-Cruz added that the stock’s decline suggests that gains from higher earnings were offset by broader market pressures, including weakness in the real estate sector.

“In our view, the recovery of SMPH’s residential segment remains largely hinged on financing affordability, particularly further downward repricing of mortgage rates, given that a significant portion of its inventory is focused on the mid-segment,” she said.

On Feb. 19, SM Prime announced that its office leasing arm, SM Offices, plans to add more than 60,000 square meters of leasable space in Cebu City by the fourth quarter of 2026 amid surging demand.

“By leaning into Cebu’s rise as the top BPO (business process outsourcing) alternative to Metro Manila, the company is moving away from the metro’s flat office market and chasing actual demand,” Mr. De Celis said.

He projects SM Prime’s first-quarter net profit at a range of P11.9 billion to P12.1 billion, and full-year earnings at roughly P51.3 billion, with revenues at P149.5 billion.

Mr. De Celis said the stock is currently at its support level of P20.80 to P21 but could fall to P20.50 if selling continues.

“For the resistance, the stock needs to clear P21.50 to show it’s back in a healthy trend. The real breakout signal would be a close above P21.75, which would put the stock back above the 20-day moving average,” he said.