Filipino-Chinese Tycoon Henry Sy's investment holding firm, SM Investments Corporation (SMIC) or SM in the Philippine Stock Exchange earned a net income amounting to PHP 18.40 billion pesos in 2010 which was 15% higher than the previous year. SM's better-than-expected corporate earnings result carried the price of its shares from an opening of PHP 461.00 last March 3 to a closing of PHP 509.50 today (March 8). The increase in SM's income can be attributed mainly to the its retail business (34%), financial services (30%), shopping malls (20%), and its real-estate business (13%). Robust consumer spending generally boosted every sector of its businesses. If you remember, the economic condition last year picked up due to the increase in government spending and the resurgence of market confidence.
The country's outlook for this year, however, is a bit subdued. The threat of inflation due to rising commodity prices is increasing by the day. Market confidence is likewise being diminished by the ongoing political unrest in the Middle East, causing foreign investors to shy away from the riskier investment like equities. With the PSEi generally trekking a downward slope, any rally in any individual security could likely be met by a similar if not a stronger sell-off. Anyway, as with most businesses, SM's growth is dependent on consumer spending. Consumer spending for the whole of this year could be slower than last year due to the reasons stated. Such could therefore reflect on the stock as well. But I could be wrong and in this case, I hope that I am. It's still the first quarter of the year so a lot of things can still happen.
Technically, the shares of SMIC rallied strongly from PHP 461.00 last March 3 to a closing of PHP 509.50 today after seeing a 15% jump in the company's profit in 2010. But if you check out SM's chart above, it has been trading within a descending channel since it peaked at PHP 589.00 on November 5, 2010. Today's move sent it right at its 130-moving average and the channel's resistance which could both act as a wall to stop it from moving higher. A failure to move past PHP 515.00 could send it back down PHP 450.00. A break above PHP 515.00, on the other hand, could push it north towards 550.00 Philippine Peso.