Analysts See Stronger Growth for SM Investments Corporation in the H2 2024

SM Investments Corporation is seen to gain from a stronger second half, which is traditionally a better season for the retail business.

According to Gilbert Lopez, Head of Research for Macquarie Capital Securities (Philippines), SM Investments recorded a net profit of P40.2 billion in the first half, representing a 10% year-on-year increase and a significant improvement in the second quarter. This was ahead of the brokerage firm's projection but in line with current full-year consensus, given that SM core businesses normally have a seasonally stronger second half, Mr. Lopez stated.

SM Retail's net profit was P4.5 billion, representing a 49% increase from the previous quarter. He also mentioned the significant increase in retail sales, which reflected a resurgence in consumption. The Health & Beauty segment of SM Retail stood out, growing 16% year on year in both the second quarter and first half. 

In another research report dated August 8, Philippine Equity Partners research analyst Russ Toribio supported the view, stating that first-half gains will continue "as a stronger second half lies ahead."

Mr. Toribio said “there was notable recovery in consumer spending in discretionary items such as fashion and home in the second quarter.”

Sales in the fashion segment increased by 10.5% year on year during the same time, owing primarily to back-to-school buying in preparation for school openings at the beginning of the third quarter. Sales in the home segment increased by 4.6% year on year in the second quarter, most likely due to the much warmer weather.

The Philippine Statistics Authority stated that headline inflation, or total inflation, fell to 3.3% in August 2024 from 4.4% in July 2024. This takes the national average inflation rate for January to August 2024 to 3.6%. 

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

SM Investments' share price ended at P885 on August 30, 2024, up from P872 on December 29, 2023.