{"id":321813,"date":"2023-01-05T11:32:07","date_gmt":"2023-01-05T03:32:07","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=321813"},"modified":"2023-02-24T11:28:23","modified_gmt":"2023-02-24T03:28:23","slug":"stock-in-focus-sm-prime-holdings-smph-5-jan-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-sm-prime-holdings-smph-5-jan-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: SM Prime Holdings (SMPH) – 5 Jan 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>SMPH<\/td><\/tr>
Company Name<\/strong><\/td>SM Prime Holdings<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>5 Jan 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 41.40<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We currently have a Buy recommendation on SMPH with a<\/strong> Target Price of Php41.40\/share<\/strong>. <\/p>\n\n\n\n

We set our target price at Php41.40 based on an estimated net asset value (NAV) per share of Php43.83, and applying a 6% discount-to-NAV, which is based on the average of SMPH\u2019s current and 2017-2019 discount-to-NAV. <\/p>\n\n\n\n

Our target price offers an upside of 12.7% and a composite return of 13.4%, inclusive of our estimated 12-month forward dividend yield of 0.7%.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Analysis and Opinion<\/h2>\n\n\n\n

Core net income up 41% to Php22.0 billion<\/strong><\/p>\n\n\n\n

SM Prime Holdings, Inc. (SMPH) reported 9 months (9M) 2022 core net income of Php22.0 billion, 41% higher year-on-year (yoy). PH mall revenues jumped 114% to Php33.9 billion driven by the resumption of charging full-rental rates starting July 2022, while revenues from China malls slid 7% to RMB550.0 million (~Php4.4 billion), weighed down by strict COVID-19 restrictions in the country. <\/p>\n\n\n\n

Residential revenues declined 12% to Php28.3 billion, dragged by higher sales cancellations as a result of the lapse of the Bayanihan Act. As a result of higher mall rental charges and notwithstanding softer residential sales, EBITDA climbed 47% to Php43.5 billion, reflecting a 7.3ppt EBITDA margin expansion to 59.1%.<\/p>\n\n\n\n

Mall revenues approaching pre-COVID levels<\/strong><\/p>\n\n\n\n

3Q mall revenues rose 124% yoy and 6% qoq to Php14.6 billion (equivalent to 95% of 3Q2019 levels), underpinned by normalized rental rates, alongside improved tenant sales amid pent-up consumer demand. Foot traffic was at ~85% of pre-COVID levels during weekdays and ~105% on weekends, while average occupancy rates improved to 92% in 3Q vs. 91% in 2Q.<\/p>\n\n\n\n

Residential sales rebound on lower cancellations<\/strong><\/p>\n\n\n\n

3Q residential reservation sales rose 16% to Php24.5 billion, led by the take-up of mid-rise buildings (MRBs). Meanwhile, 3Q residential sales improved 33% yoy and 63% qoq to Php10.1 billion on the back of higher construction progress, alongside lower cancellations.<\/p>\n\n\n\n

2023 core net income to exceed pre-pandemic levels<\/strong><\/p>\n\n\n\n

We are revising our 2022\/2023 core net income forecast downwards by 9%\/2% to Php31.0 billion\/Php39.6 billion, representing 42%\/28% yoy growth, to account for softer-than-expected residential sales.<\/p>\n\n\n\n

Meanwhile, we project 2024 core net income to grow 12% to Php44.5 billion. Despite our forecast downgrades, we reaffirm our view that SMPH\u2019s core net income will exceed pre-pandemic levels beginning in 2023, underpinned by recovering tenant sales, normalization of mall rental rates, and growing mall footprint.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>