Just January of this year (2020) SMPH hit a high of 43.35, now it is at 29. It is down some 33%. It shed almost a third of its high.
The COVID-19 pandemic exposes the qualities of every company listed in the stock exchange. The pandemic highlighted SMPH as a money printing machine. With the economy mostly shuttered, SMPH was still able to generate 10.4 Billion Pesos of net income and 9.4 Billion Pesos of cash flows from operations.
Although, it is facing a 43.8 Billion Pesos of current debts payable within the next 12 months. There is no doubt that SMPH will be able to refinance the same given its still strong cash flow generation despite all the pandemic restrictions.
To illustrate its financial strength, SMPH can generate revenue and cash flows of at least 60 Billion Pesos in the succeeding periods without even spending a single peso for capital expenditures to conserve cash. At the end of June 2020 it has available inventory units of 12,000 units that could easily translate to at least 60 Billion Pesos of sales and cash flows and it doesn’t have to spend a single peso of capex for it since it has already been built.
SMPH is what they call “money begets money.” SMPH’s malls generate a lot of money. For the mature malls (mall that exists for over a decade) the money it creates is almost free. The costs for those mall have been recovered or have nearly been recovered yet they are still generating money. The malls that SMPH had established in its early years are still spewing money up to now and well into the future they will still spew money.
SMPH at 29 or lower, is definitely a golden opportunity to buy a money machine for less.
There is no doubt mankind will triumph over SARS-CoV-2 and we will go back to our normal lives. By then, SMPH will have returned to its normal valuation.
Disclaimer: This is an independent analysis with the objective of informing readers about a company’s fundamentals. Accuretti Systems Inc. does not own any shares of SM Prime Holdings.