{"id":329537,"date":"2024-09-19T13:46:33","date_gmt":"2024-09-19T05:46:33","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=329537"},"modified":"2024-09-19T13:46:35","modified_gmt":"2024-09-19T05:46:35","slug":"stock-in-focus-sm-investments-corp-sm-19-sept-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-sm-investments-corp-sm-19-sept-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: SM Investments Corp. (SM) – 19 Sept 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>SM<\/td><\/tr>
Company Name<\/strong><\/td>SM Investments Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>19 Sept 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 1,092.70<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Moderating inflation coupled with the continuance of the rate cut cycle should eventually translate to pick-up in consumer demand for both essentials and non-essentials. SM\u2019s exposure to the full spectrum of consumer spending should translate to better 2nd half (2H) earnings for SM Retail, especially since the second half is typically the best time of the year for retail. Given the positive outlook for consumer spending, we therefore maintain our BUY rating for SM with a Target Price of P1,092.70.<\/p>\n\n\n\n

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

Retail was the runt of the litter<\/strong><\/p>\n\n\n\n

SM posted 1st half (1H) 2024 earnings growth of 10%, which was driven mainly by BDO\u2019s +12% YoY earnings growth backed by higher Net Interest Income (+11% YoY) and Non-Interest Income (+13% YoY). SMPH also posted robust earnings growth of +13% YoY, attributable to several factors such as improved foot traffic and sustained tenant sales for the Food and Beverage segment. In contrast, SM Retail reported a 9% decline in earnings despite a 4% uptick in revenues, which indicates resurgence in consumer demand. <\/p>\n\n\n\n

We expect this positive trend in retail revenues to accelerate in the following quarters as inflation continues to ease, further boosted by the implementation of the P35 wage hike last July. While the wage hike would simultaneously translate to higher costs for SM Retail, we believe that the net effect would be positive as it would also increase the disposable income of SM\u2019s very broad customer base.<\/p>\n\n\n\n

Retail recovery<\/strong><\/p>\n\n\n\n

We also note that SM Retail\u2019s specialty retail category did particularly well in the first half, pointing to likely pick-up in discretionary spending. This segment\u2019s outperformers in terms of sales growth were Health and Beauty (+15.8% YoY) and Fashion (+7.9% YoY), which was led by back-to-school shopping.<\/p>\n\n\n\n

As one of the country\u2019s retail giants, SM Retail is well-positioned to take advantage of further pick-up in consumer demand given theircurrent retail portfolio alongside its ambitious expansion plans, which includes opening 400 new Alfamart stores by year-end.<\/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>