Q2 lockdowns hurt SM Prime's recovery

SM Prime [SMPH 32.65 0.91%] earned Q2/21 profit of P5.2 billion, up 145% from Q2/20 profit of P2.1 billion, and down 20% from Q1/21 profit of P6.5 billion. SMPH said that consolidated revenues were up 13% y/y to P20.3 billion, driven largely by the 35% increase in the collection of rent (from P5.5 billion last year to P7.5 billion this year) that coincided with the reopening of certain sectors of the Philippine economy.

SMPH notes that while the rents returned in Q2, its 1H rent collection is still down 13% y/y due to the pre-COVID rent collection in Q1/20. Real estate sales were up 3% for the first half of 2021, which SMPH attributed to the timely compilation of ongoing projects. SMPH’s cinema and event ticket business did P10m in business in 1H/21, which is just 2% of the P607m that SMPH booked in revenue in 1H/20; the business segment did not even get an income statement line-item in the quarterly y/y comparison chart provided by SMPH.

MB BOTTOM-LINE

Shareholders are going to like to see that massive recovery, but like I’ve mentioned several times this earnings season, comparing to Q2 last year is just not really worthwhile for most companies. The same applies here. SMPH is experiencing the same residential real estate momentum that the other developers have noted, and the same mall-based revenue kick that the other mall operators have noted.

The Q2 lockdowns hurt SMPH’s recovery, as is seen by the 20% decline in net income as compared to Q1. It’ll be the same story this quarter, as the new ECQ lockdowns in NCR and other areas will undoubtedly have a similar impact. If we compared SMPH’s Q2 and 1H net income figures against Q2/19 (down 50%) and 1H/19 (down 40%), though, we get that same depressing glance into just how far behind we are and how economically devastating the pandemic and the associated lockdowns have been. The company’s net income is up 145% over last year, but even after that, it’s still just half of what it was two years ago.

We’ve got a long way to go yet, to get back on track, and the path to full recovery only seems to be getting longer.

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