{"id":327655,"date":"2024-04-25T02:08:59","date_gmt":"2024-04-24T18:08:59","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327655"},"modified":"2024-04-25T02:09:01","modified_gmt":"2024-04-24T18:09:01","slug":"stock-in-focus-sm-prime-holdings-smph-25-apr-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-sm-prime-holdings-smph-25-apr-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: SM Prime Holdings (SMPH) – 25 Apr 2024 by AP 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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>25 April 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 44.45<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We remain confident that the company will continue to grow substantially in the following years. Albeit the listing of the REIT is delayed, we see this as a strategic move given the high-interest rate environment alongside market demand remaining weak. The company\u2019s ability to take on more debt to fund its expansions will result in a net positive effect. We therefore reiterate our BUY rating for SMPH with a Target Price of P44.45.<\/p>\n\n\n\n

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

No REIT launch this year<\/h3>\n\n\n\n

SMPH is pushing back the launch of its REIT beyond 2024, noting the high-interest rate environment alongside market volatility as primary reasons. Note that the company was looking to raise $1-Billion from the REIT\u2019s IPO, priming it to supposedly be the largest IPO for the year.<\/p>\n\n\n\n

Funding through loans<\/h3>\n\n\n\n

Given the delay of the REIT\u2019s launch, the proceeds of which would have been used for SMPH\u2019s expansion plans including their $3-Billion reclamation project in Manila Bay, we note management saying that a majority of their funding will instead be composed of loans. Given SMPH\u2019s current Net Debt-to-Equity level of only 0.87, we see that the company still has substantial room to borrow money to fund its expansion. We also note that the company currently has cash and cash equivalents of P32.6-Billion which could also be utilized.<\/p>\n\n\n\n

Build build build<\/h3>\n\n\n\n

For 2024, we note that the company is planning to launch 450k sqm GFA worth of Malls which bodes well given consumer demand pick-up. Alongside this the company is also looking to launch 8-10 thousand resi units, majority of which will be composed of mid-rise buildings located in provincial areas. <\/p>\n\n\n\n

We note that the shift in launches mirror the shift in demand to areas outside NCR as can be deduced from the substantial increase in RRELs (Residential Real Estate Loans) granted in 3Q23 and 4Q23 which grew by 15% and 25% on a YoY basis, respectively. The company also plans to launch 130k sqm of Offices which will be located in Pampanga, Bacolod, and Iloilo. Note that we remain cautious with this segment moving forward given the emergence of different types of work setups.<\/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>