{"id":330778,"date":"2024-12-05T12:41:27","date_gmt":"2024-12-05T04:41:27","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330778"},"modified":"2024-12-05T12:39:37","modified_gmt":"2024-12-05T04:39:37","slug":"stock-in-focus-sm-prime-holdings-smph-5-dec-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-sm-prime-holdings-smph-5-dec-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: SM Prime Holdings (SMPH) – 5 Dec 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>5 Dec 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 40.30<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Keeping in mind that SMPH and its empire of malls is in the best position to take advantage of this consumer-driven economic growth, we are willing to turn the blind eye on the company\u2019s sizable inventory of unsold units and maintain our BUY rating on the stock with a Target Price of P40.30.<\/p>\n\n\n\n

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

Condos as far as the eye can see<\/strong><\/p>\n\n\n\n

A recent report by Colliers Philippines found that property developers are currently sitting on an inventory of 75,300 pre-selling and ready-for-occupancy condo units worth P154.4-Billion, after aggressive rate hikes from the BSP dampened demand for property. According to Colliers, it may take developers 5.8 years to clear their inventory \u2013 five times longer than it used to take before the pandemic. Developers have responded by offering discounts of up to 25% for cash buyers, extended and discounted downpayment terms, and easier installment schemes.<\/p>\n\n\n\n

SMPH is going against the grain<\/strong><\/p>\n\n\n\n

As other developers pull all the stops to sell their units, SMPH has opted to instead tighten their qualifications for prospective buyers to improve the quality of their clientele. This has resulted to a massive 51.2% QoQ \/ 67.8% YoY drop in reservation sales in 3Q24. At the same time, SMPH pushed back their launches and are focusing instead on completing existing projects and whittling down their unbooked revenues, which posted its fifth consecutive quarter of decline and currently sits at around P161.6-Billion.<\/p>\n\n\n\n

SMPH is not just a property developer<\/strong><\/p>\n\n\n\n

Rising panic over the condo glut, along with the prospect of slower easing, has weighed heavily on listed property companies. This is further exacerbated by the POGO ban and the resulting jump in office vacancies. However, it seems that investors consistently overlook that SMPH\u2019s core business is malls and not selling condo units or renting out office space. Excluding the pandemic era, mall revenues typically account for around 53% of SMPH\u2019s revenues while property development accounts for around 37%. <\/p>\n\n\n\n

Further, SMPH\u2019s position as the top mall operator in the country ensures that the occupancy rate of its malls always remain high, with the current occupancy back to the pre-pandemic level of 95%. That is why SMPH is shifting its focus from building more residential units to boosting its mall portfolio to 100 by the end of 2027. As such, we see SMPH more as a consumer play rather than a property company.<\/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>