Q&A: SM Prime Holdings | SMPH

Question:

Hi, Sir AJ-

I am one of the participants on the technical analysis seminar. I have question regarding SMPH, is it still good to hold SMPH as we know SMPH is moving sideways until now? By the way, I bought SMPH with an average price of 25.93 and now I am thinking to shift to ALI as my long term stock is this a good decision in choosing ALI over SMPH? Thank you very much for your wonderful answer and sorry if I asked too many question.

 

Have a nice day

Regards,

ANGELO

Answer:

In my opinion, SMPH might still go sideways for quite some time. The risk I’m looking at for SMPH is the real estate bubble (expected to be worse by 2018 when all these condominium buildings within NCR are completed). Although most of the SMPH projects are strategically located and they are now starting to build outside Metro Manila area, most of their condominium units are not fully fit with the work-life environment unlike Ayala and Megaworld. Also, their condominium units are receiving some negative feedback which is “very commercialized” and does not specifically fit with the customer’s need except for having the SM malls within the perimeter.  

Knock on the door and may God forbid, high rise buildings may also not be good considering there is impending risk of the Big One which might potentially happen in the metro (hopefully will not happen). There might be fears which may discourage the market to patronize high rise buildings.

 In my opinion, it is a good company with strong financials but may not provide good return in the short term in terms of price valuation. Dividends could be a different story. Just my thoughts.

 

Regards,

Al Jay