Eye on earnings: Shoppers sustain top property firms’ revenue 

Earnings of top publicly listed property developers were robust in the first quarter, thanks in part to the mall’s steady performance.

SM Prime Holdings Inc. (SMPH) and Ayala Land Inc.’s (ALI) boost from retail spaces was underpinned by revived consumer spending, wage growth, and occupancy rates that beat industry averages.

Earnings Review

ALI noted temporary drags from accelerated mall renovations—which are set to conclude six months ahead of schedule—but expects a rebound once completed.

Office leasing showed some signs of recovery, supported by demand from outsourcing companies.

However, residential presales remained under pressure, particularly in the middle-class segment. This reflects lingering sectoral segments. ALI’s premium segment saw resilient demand sustained by high-income buyers.

To counter sluggish residential demand, both SMPH and ALI are pivoting to commercial or industrial lot sales—with ALI launching sales and SMPH announcing plans to follow suit.

Tempered sentiment

While malls, offices and leisure trends offer near-term support, the residential sector’s muted outlook tempers investor sentiment.

A neutral stance on both names is thus maintained but favoring ALI, as its premium or horizontal residential focus offers better resilience to sector challenges.

While SMPH benefits from stable retail spending, ALI should be in a better position to benefit from easing monetary policy given a higher share of residential revenues.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.) 

CHARLES RANDY LUMHOD is an Equity Research Analyst of Metrobank’s Trust Banking Group. His coverage includes shipping, properties, REITS, and consumers, as well as select offshore markets. He holds a Bachelor’s degree, cum laude, in Business Administration major in Financial Management from the University of Santo Tomas. Outside work, he stays active by running and going to the gym. 

GERMAN DE LA PAZ III, CFA serves as an Equity Research Lead at Metrobank’s Trust Banking Group. His coverage includes gaming, telcos, conglomerates, and utilities, as well as select offshore markets. German holds a Bachelor’s degree in Humanities and a master’s degree in Industrial Economics from the University of Asia and the Pacific. Recently, he obtained his CFA charter and is currently pursuing additional industry certifications. In his free time, German enjoys playing sports, particularly basketball, and has a penchant for reading fiction books.