SM Prime H1 net income up 21% y/y on retail "recovery"
SM Prime [SMPH 37.00 1.09%] [link] pushed out guidance on its Q2 financials that said its H1 net income was up 21% year-on-year, to P14.1 billion, driven mostly by the 92% surge in SMPH’s mall business revenues thanks to the relaxation of movement restrictions that decimated the business during 2020 and 2021.
Mall rental income increased 80% y/y, but related streams of revenue in cinemas, event ticket sales, and other revenues jumped 300% to P2.0 billion.
SMPH’s residential property development arm, SMDC, reported an H1/22 revenue drop of 21% y/y, which SMPH attributes to a wave of canceled sales after the protections of the Bayanihan Act lapsed and forced buyers to walk away from commitments that they could no longer afford.
SMPH’s office segment’s revenues were 14% higher y/y to P2.8 billion, and its hotels and convention centers segment’s revenues were 205% higher to P1.7 billion.
SMPH’s President, Jeffrey Lim, said that the local economy “will continue to benefit” from “remittances from [OFWs], [BPOs], and local travel and tours activities.”
MB BOTTOM-LINE
Ok, so on the one hand, that’s a massive rebound in SMPH’s mall business that we should all take as a good sign of recovery, and a partial confirmation of the retail recovery that we’ve been told has started.
On the other hand, though, SMPH the first half of this year is still a troubling soup of weakness if we wanted to use the company’s financial statements as a measure of different aspects of our overall recovery.
Take the malls business, for example. The P20.6 billion in H1/22 malls revenue is 31% lower than the P29.9 billion that SMPH raked in from its malls in pre-COVID H1/19.
The residential segment revenue is down 14% from the H1/19 number, but it’s also down more than 25% from the H1/21 number, which was during the lockdown.
It’s troubling to see the residential arm failing to outperform “deep COVID” numbers, and then attributing that under-performance on the expiration of congressional consumer protection measures.
Zooming out, SMPH’s H1/2019 net income was P19.2 billion on P57 billion in consolidated revenue, and its stock price was P37.60/share on August 8, 2019.
SMPH’s H1/2022 net income was P14.1 billion (26% lower) on P46.3 billion in consolidated revenues (18% lower), with a stock price of P37.00/share.
Malls recovered relative to when people couldn’t really go to them, but they’re nowhere near where they were pre-pandemic, and the company’s residential business is actually trending down due to expiring debt relief laws, and that was before the wild increases in interest rates that we’ve seen (and that we’ll continue to see for some time).
Was SMPH sulit relative to today’s price, or is it expensive today relative to previous valuations?
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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