Analysts expect better second half for SMIC

SM Investments Corp. (SMIC) is expected to have a better second half as its retail business is projected to benefit from higher consumer spending, the conglomerate said on Monday, citing reports from analysts.

“There was notable recovery in consumer spending in discretionary items such as fashion and home in the second quarter,” Philippine Equity Partners, Inc. Research Analyst Russ Vasilius Toribio was quoted as saying in the press statement e-mailed by SMIC.

During the second quarter, SMIC said that sales in the fashion segment rose by 10.5% year on year, led by back-to-school shopping, while home segment sales grew by 4.6% annually due to warmer weather.

“Moderating inflation increases the purchasing power of consumers, which will drive growth in retail and leisure business,” Mr. Toribio said.

Gilbert Y. Lopez, Macquarie Capital Securities (Philippines) research head, said SMIC’s key businesses “typically have a seasonally stronger second half.”

He added that SMIC’s first-half net profit, which rose by 10% to P40.2 billion, was ahead of the brokerage firm’s forecast but in line with available full-year consensus.

Mr. Lopez noted the sequential improvement in earnings across all of SMIC’s major businesses in retail, banking, and property.

He also mentioned the improvement in retail sales, which reflected consumption recovery. The standout was the health & beauty segment of SM Retail, which grew 16% year on year for both the second quarter and the first half.

SMIC’s retail operations consist of grocery stores, department stores, and specialty retail stores. It also has a presence in the property sector via SM Prime Holdings, Inc., which has interests in malls, residences, offices, hotels, and convention centers, as well as tourism-related property developments.

The conglomerate is also in the banking segment via BDO Unibank, Inc. and China Banking Corp.

On Monday, SMIC shares rose by 0.9% or P8.50 to end at P948.50 apiece. — Revin Mikhael D. Ochave