{"id":326003,"date":"2023-12-06T22:04:42","date_gmt":"2023-12-06T14:04:42","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326003"},"modified":"2023-12-06T22:04:48","modified_gmt":"2023-12-06T14:04:48","slug":"stock-in-focus-sm-prime-holdings-smph-6-dec-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-sm-prime-holdings-smph-6-dec-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: SM Prime Holdings (SMPH) – 6 Dec 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>6 Dec 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 42.80<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Our sum-of-the-parts (SOTP) net asset value (NAV)-based target price (TP) of Php42.80 for SMPH implies that the current Php33.35 share price only recognizes the potential growth of existing malls, residential development, office, hotels, and landbank, plus just nearly 45% of what we think is the fair value of its 360-hectare Pasay Reclamation project based on DCF. <\/p>\n\n\n\n

With SMPH getting the green light from the Philippine Reclamation Authority (PRA) to resume its reclamation activities in Pasay, we believe there is no reason to hold back any interest. Recall that a suspension order was served on the project in mid-August 2023, pending the DENR’s (Department of Environment and Natural Resources) compliance review. SMPH is eventually found to be fully compliant. <\/p>\n\n\n\n

We reiterate our BUY rating on SMPH with a massive potential share price upside of 28%, clearly coming from the valuable reclamation project.<\/p>\n\n\n\n

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

Reclamation plans<\/h3>\n\n\n\n

We estimate the cost to reclaim at Php75,000\/sqm or Php270 billion for the entire Pasay Reclamation project. SMPH expects all islands to emerge by 2026 and plans to complete the horizontal development for another two years. There will be roads and bridges by 2028. <\/p>\n\n\n\n

Earlier this year, SMPH indicated that it would set aside about Php110 billion (US$2 billion) for the project, with the first Php55 billion (US$1 billion) to be spent in year one and funded through the planned REIT offering. We believe there is also enough room for more debt, with a debt-to-equity ratio of 0.95x as of the end of September 2023. The new Pasay Reclamation project, upon completion, will be connected to the Mall of Asia (MOA) complex, which is a success story of reclaimed land turned into a vibrant business district.<\/p>\n\n\n\n

Earnings well on track<\/h3>\n\n\n\n

SMPH\u2019s 9M23 net income reached Php30.1 billion, up 37% year-on-year (y\/y), well on track to meet our full year 2023 forecast of Php38.5 billion. Consolidated revenues grew by 26% y\/y to Php92.6 billion, 57% of which came from the mall segment (+37% y\/y to Php52.5 billion), 33% from residential (+8% y\/y to Php30.6 billion), 5% from office (+14% y\/y to Php4.9 billion) and the balance of 5% from hotels & conventions (+64% y\/y to Php4.6 billion).<\/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>