{"id":327385,"date":"2024-04-05T02:08:08","date_gmt":"2024-04-04T18:08:08","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327385"},"modified":"2024-09-01T22:32:36","modified_gmt":"2024-09-01T14:32:36","slug":"commentary-sm-buys-creit","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/commentary-sm-buys-creit\/","title":{"rendered":"Commentary: SM buys 28.8% of CREIT"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\">SM buys 28.8% of CREIT<\/h3>\n\n\n\n<p>SM recently disclosed the purchase of 1.88-Billion shares of CREIT from Citicore Renewable Energy Corporation (CREC) and Citicore Solar Tarlac 1 for P5-Billion, which represents 28.79% of total outstanding shares. The purchase was executed at P2.5634\/share. Two separate block sale transactions were executed, one being 918,720,864 which is exactly the number of shares that Citicore Solar Tarlac 1 previously held, and the other being 965,653,136 shares which was purchased from CREC.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">CREC keeps just enough to remain the largest shareholder<\/h3>\n\n\n\n<p>This would entail a substantial shift in CREIT\u2019s ownership structure from the previous combined ownership of CREC and Citicore Solar Tarlac of 61.7% down to just CREC with 32.9%. Despite SM\u2019s purchase of 28.8% of overall O\/S, CREC will remain as CREIT\u2019s largest shareholder.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">A mutually-beneficial partnership<\/h3>\n\n\n\n<p>The deal would allow CREC to recycle capital for its projects, especially after its IPO was delayed by unfavorable market conditions. We note that CREIT declared a total DPS of P0.199\/share which is 8.7% higher than last years\u2019 P0.183\/share. <\/p>\n\n\n\n<p>Factoring in the extremely conservative assumption that CREIT will declare the same amount as dividends for 2024, SM would be receiving P374.99-Million worth of cash this year. This would also be earnings accretive for SM as the conglomerate would also be receiving 28.8% of CREIT\u2019s annual earnings as equity in profits of an associate. Furthermore, this also boosts SM\u2019s value fundamentally as the stake will also be embedded into SM\u2019s valuation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Outlook<\/h3>\n\n\n\n<p>We see this move as SM\u2019s sign of confidence towards CREIT\u2019s capability to sustain healthy dividends. Alongside this is what we previously mentioned about CREC\u2019s capital recycling, which would bode well not only for CREC but also for CREIT moving forward as asset infusions occur. <\/p>\n\n\n\n<p>We therefore maintain our BUY rating for CREIT with a Target Price of P2.92 and we advise clients to purchase the stock as soon as the suspension is lifted given the expectation that the price would likely open near SM\u2019s purchase price.<\/p>\n\n\n\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:16px\"><em><em>This report is prepared by PinoyInvestor\u2019s partner broker below. Find out more about <a href=\"https:\/\/www.pinoyinvestor.com\/smartinvestor\/our-partner-brokers\/\">our partner brokers<\/a> and sign up to avail their complete trading brokerage services.<\/em><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here\u2019s a commentary on an important issue or event affecting the stock market<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1124,11],"tags":[],"class_list":["post-327385","post","type-post","status-publish","format-standard","hentry","category-commentaries-special-reports","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/327385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=327385"}],"version-history":[{"count":1,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/327385\/revisions"}],"predecessor-version":[{"id":327387,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/327385\/revisions\/327387"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=327385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=327385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=327385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}