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SMC Profit UP


By: Marvin Germo | May 15, 2018

SMC locking in a strong profit for the Q1

San Miguel Corporation (SMC) reported an increase of its net income of 31% amounting to P19.4 billion in the first quarter of 2018. The diversified conglomerate has been doing well in its businesses since it has been reaping profits year-on-year. The company’s revenue grew by 20% and its operating income grew by 19% higher than last year. The growth was mainly due to the robust performance of all of its businesses from different sectors.

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As mentioned above, SMC’s profit increased due to its overall performance from the businesses it is handling. For its beer business, San Miguel Brewery Inc.’s revenue grew by 18% amounting to P29.8 billion and its net income grew by 26% year-on-year. Its consolidated volume rose by 11% to P29.8 billion. The growth was due to increased consumption, marketing campaigns, the implementation of trade and consumer promos and also from international operations.

Ginebra San Miguel Inc., on the other hand, net income increased by 97% amounting to P255 million which was driven by a 20% increase in its sales volume. The company’s revenue grew by 24% while its operating income increased by 58% higher than the same period last year. Efforts have been made to boost its core brands – Ginebra San Miguel and Vino Kulafu.

SMC actually merged its beer and liquor businesses with San Miguel Pure Foods Corporation (SMPFC) which is now officially renamed to San Miguel Food and Beverage, Inc. its revenue growth was 12% amounting to P29.8 billion on the back of its strong growth of its poultry & meats and value-added meats businesses. Despite this, its net income declined by 7% compared from the same period last year. This was due to the higher costs of its major raw materials and expansion-related operating expenses and also due to foreign exchange losses by the depreciation of the peso against the US dollar.

As for San Miguel Yamamura Packaging Group, it locked in a revenue increase of 25% amounting to P8.6 billion due to the strong sales of its glass, plastics, flexibles and continuous growth in its Australian operations. Its operating income was P793.6 million.

Lastly, for its fuel and oil unit, Petron Corp.’s net income rose 4% higher compared to last year. This is due to its strong domestic sales volume and improved operating efficiencies in its Philippine and Malaysian operations.

Expect better performance

It is no doubt that SMC is really performing great since it has locked in substantial profits from across the businesses it is handling even in the first few months of this year. Hopefully, this performance will continue until the end of the year and even years to come. SMC being the largest publicly listed food, beverage and packaging company in Southeast Asia, it has also ventured beyond its core businesses such as fuel & oil, power generation and infrastructure. There is a strong potential that the company will still grow and develop its current businesses as it is focused on expanding.

Technical Analysis

As compared to most of the stocks in the market, SMC was able to hold its ground and did not breakdown or reverse into a downtrend.

For position traders, the long term trend is still up with its strongest support pegged at 120 Pesos.  As long as the stock stays above that level, you can still expect an upward movement albeit a bit slower than other stocks that have started to breakout at this point.

For quick traders, SMC started to consolidate at the start of the year. It is currently ranging from 133 to 152. As long as the stock stays above and bounces from the 133 level this constitutes a buy and you can set your target price at 152. This roughly a 12% trade if executed right. Please make sure to cut loss if the stock drops below 133 as it may retrace back to as low as 120 Pesos which happens to be the strong support. The stock is currently at 139 as it currently progresses from its bounce from 133. For those who  positioned at the bounce congratulations. Do not sell to early, sell if the stock fails to breakout of 152.

I hope this helps you! More stock updates again soon!

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