On Monday, Citi analysts began coverage of SM Investments Corp. (SM:PM) (OTC: SVTMF), assigning a Buy rating to the company's stock along with a price target of PHP1,091.00. SM Investments is recognized as one of the largest conglomerates in the Philippines and holds the title of the largest stock by market capitalization in the country's stock market.
Citi's analysis suggests that SM Investments is a central player in the Philippine economy, with over 90% of its asset value stemming from its Retail, Property, and Banking businesses, sectors in which it maintains a leading position. The firm's optimistic outlook is further bolstered by the expectation that the Philippines' GDP will grow by 6% in 2025, which is projected to be the highest among the ASEAN countries.
The analysts expect that SM Investments' retail business will significantly contribute to the company's earnings in 2025, with a forecasted year-over-year growth of 19%, following a challenging year in 2024. The anticipated growth in the retail sector is set to play a crucial role in the company's performance.
Furthermore, Citi predicts that an increased contribution from SM Retail, which is currently an unlisted subsidiary, will help reduce the net asset value (NAV) discount from the present 30% to 15%, aligning it with historical averages. The price target of PHP1,091.00 is based on a net asset value (NAV) method, which allocates 36% to SM Retail, 32% to SM Prime Holdings (SMPH), and 28% to BDO Unibank (BDO), reflecting the conglomerate's diversified investment portfolio.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.