Last week, SM PRIME Holdings, Inc. (SMPH) was the most frequently traded stock on the local exchange, as market participants decided to take gains after news of the company’s collaboration with other property companies to build a 26-hectare sustainable waterside area in Cebu.

From June 28 to July 2, 71.37 million SM Prime shares worth P2.64 billion were exchanged, according to statistics from the Philippine Stock Exchange.

The share price of the Sy-led property company ended at P37 per share, down 2.1 percent from the closing price of P37.8 per share on June 25. The stock has down 5.73 percent so far this year.

“Investors likely sold on news that Ayala Land, Inc., together with SMPH and [Ayala Land subsidiary] Cebu Holdings, Inc., would be constructing the 26-hectare waterside area in Cebu,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio wrote in an e-mail.

“However, this implies that the volatility was not driven by anything fundamentally fundamental, but rather by investors just taking gains after a strong rise in the previous trading sessions,” she said.

Meanwhile, Diversified Securities, Inc. Equity Trader Aniceto K. Pangan stated in a mobile phone message that while SMPH’s development project in Cebu provides a positive long-term outlook for the company, near-term uncertainties brought by the pandemic on recovery “continues to be a challenge” to SMPH, which explains the stock’s persistent volatility.

The waterside project, dubbed South Coast City, will be situated inside South Road Properties in Cebu and would have approximately two million square meters of built-out area, 30% of which will be for residential spaces and 70% for commercial areas. The property is claimed to include “prime entertainment and commercial concepts,” as well as “other mixed-uses to suit various market needs.”

Ayala Land unveiled the South Coast City land development construction on Tuesday at a media event. The project is now underway and is expected to be completed by May of next year.

The day following the news, SMPH’s stock price dropped 3.18 percent to P36.5 a share on Wednesday, the biggest day-on-day stock price movement last week. The stock price recovered somewhat over the following two days, rising 1.1 percent on Thursday and 0.27 percent on Friday.

SMPH’s consolidated net income for the first quarter was P6.5 billion, a 22% decrease from the P8.3 billion generated in the same time previous year. It improved by 80% quarter on quarter compared to the P3.6 billion profit achieved in the fourth quarter of 2020.

“Certainly, the recovery in the economy combined with the easing of limitations would be a good development for the performance of SMPH unless hampered by the prolonged existence of the pandemic virus, which tends to restrict people mobility,” said Mr. Pangan of Diversified Securities.

Ms. Agravio of Regina Capital has a similar outlook: “[B]eing the country’s biggest mall operator, [SMPH] will profit from increased foot traffic in its retail sections.” This is especially significant since, traditionally, its malls have accounted for more than half of the firm’s overall revenues,” she added.


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