Financial analysts have predicted that SM Investments Corporation (SMIC) will finish 2024 on a stronger footing, based on a solid first-half performance.
Also favoring SMIC's performance is the traditional better season for its retail business in the second half.
Gilbert Lopez, head of research for Macquarie Capital Securities (Philippines), said in his research report that SM Investments reported a net profit of P40.2 billion in the first half, which reflected a 10% year-on-year growth and a strong improvement in the second quarter.
Lopez said this was ahead of the brokerage firm's forecast but in line with the available full-year consensus, bearing in mind that SM key businesses typically have a seasonally stronger second half.
Lopez added that "what was good" was the sequential improvement in earnings across all of SM Investments' major businesses in retail, banking, and property. SM Retail had a net profit of P4.5 billion, or 49% quarter-on-quarter growth.
He also noted that what was particularly interesting was the marked improvement in retail sales, reflective of consumption recovery. The standout was the Health & Beauty segment of SM Retail, which grew 16% year-on-year in both the second quarter and the first half.
In another research report dated August 8, Philippine Equity Partners research analyst Russ Toribio echoed the sentiment, saying gains from the first half will continue "as a stronger second half lies ahead."
Toribio said, "There was a notable recovery in consumer spending on discretionary items such as fashion and home in the second quarter."
In the same period, sales in the fashion segment posted a 10.5% year-on-year growth, mainly due to back-to-school shopping in preparation for school openings at the start of the third quarter. Sales in the home segment saw a 4.6% year-on-year growth in the second quarter, which was likely related to much warmer weather during the period.
The Philippine Statistics Authority reported that the Philippines' headline or overall inflation eased to 3.3% in August 2024 from 4.4 percent in July 2024. This brings the national average inflation from January to August 2024 to 3.6 percent.
"Moderating inflation increases consumers' purchasing power, which will drive growth in retail and leisure business," Mr. Toribio said.
SM Investments closed at P885 a share at the end of trading on August 30, 2024, up from P872 per share at the end of December 29, 2023.
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