SHARES in SM Prime Holdings, Inc. dropped last week despite a robust first-quarter (Q1) earnings report and a strategic partnership to address the country’s energy crisis.
Data from the Philippine Stock Exchange (PSE) showed 57.68 million shares worth P1.17 billion exchanged hands from May 6 to 10, making the listed property developer the sixth most actively traded stock in the local bourse last week.
Shares in the Sy-led property developer finished trading at P26.75 on Friday, 2.4% lower than a week earlier. For the year, the stock fell by 18.7%.
Luis A. Limlingan, head of sales at Regina Capital Development Corp., said that price action movement in the financial markets has been primarily driven by the earnings season and significant economic indicators data such as gross domestic product (GDP) and consumer price index (CPI).
He added that there have been speculations about how the results of the MSCI rebalancing will impact the constituents of various indices, both positively and negatively.
Despite a good earnings report, Jeff Radley C. See, head trader at Mercantile Securities Corp., said that sentiment in the property sector remains bearish due to the high-interest-rate environment.
However, Mr. See noted that investors remain optimistic about a potential rate cut by the US Federal Reserve later this year.
In the first quarter, the Philippine economy expanded by 5.7%, faster than the 5.5% in the previous quarter but slower than a year earlier. Inflation in April quickened for the third straight month to 3.8%, still settling within the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target range.
Meanwhile, the central bank’s Monetary Board maintained its policy rate at 6.5%, nearly a 17-year high, after hiking benchmark interest rates by 450 basis points from May 2022 to October 2023.
SM Prime reported steady growth in the first three months of 2024. Attributable net income grew by 10.8% to P10.46 billion from P9.44 billion a year earlier. Consolidated revenues also increased, reaching P30.72 billion, up 7.3% against P28.63 billion in the same three months last year.
Additionally, SM Prime signed an agreement with MORE Power Iloilo, the main electric distribution utility in Iloilo City, last April 30 for the Interruptible Load Program. This partnership will help alleviate the severe energy crisis affecting the Visayas grid in the Philippines.
The agreement was a timely and critical move to address the current energy crisis in the country.
Mr. Limlingan said that investors are now looking forward to BSP’s future guidance on policy rates as the price has reflected the impact on earnings. He added that the listed property developer is already a major index member and has shown solid earnings growth despite the challenging environment.
If there is any weakness from the MSCI rebalancing this month, this may be an opportunity for bottom fishing, Mr. Limlingan said. He also expects earnings to improve in the second half of the year if rates fall and inflation moderates.
Support is at P26 and resistance at P27.80, he said.
For Mr. See, support levels are P25.60 and P24.50 while resistance levels are P27.70 and P29.30. — Abigail Marie P. Yraola
SM Prime shares fall despite Q1 earnings, energy agreement
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