SMPH: ADB financing proposal strengthens Pasay 360 investment case

From AB Capital's The Opening Bell: Three Moves

Event

ADB is considering a US$500 million (P31.7 billion) nonsovereign loan for roads, bridges, flood protection and utilities at SMPH's 360-hectare Pasay 360 development, with board consideration scheduled for Nov. 25. The proposal follows AIIB's separate potential US$150 million facility, bringing prospective infrastructure financing to US$650 million, subject to approvals.

View

We think the financing pipeline reinforces the thesis in our Oct. 16 report: Pasay 360 is moving toward infrastructure execution following Presidential Proclamation No. 1479, which covered 213.57 hectares, or 59% of the project. With horizontal infrastructure only 1% complete in 2Q26, funding visibility is meaningful.

Catalyst

The November ADB decision, environmental and social due diligence, and issuance of special patents and titles are the next milestones. ADB's "substantial risk" classification underscores remaining execution hurdles, while SMPH's eventual 176.4-hectare entitlement still requires parcel-level confirmation and conveyance. Land monetization therefore remains a medium-term catalyst.

Action

Maintain OUTPERFORM and our P25.50 target price. We value SMPH's Pasay 360 interest at P4.6/share against a third-party estimate of P6.14/share, underscoring the project's NAV significance. We see scope for the valuation discount to narrow as titles and financing advance, although near-term earnings impact remains limited.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.