Delivering value and sustained growth

Published in Finance Asia, Fall 2018 Issue

SM Investments Corporation’s growing interests in retail, property, banking and its strategic stakes in high-potential sectors provide the group’s sustained growth momentum and increasing shareholder value.

SM Investments Corporation (SM) is pushing ahead with a solid growth track of market-leading investments and in expanding its domestic footprint in the Philippines amid a challenging economic landscape in the region.

The holding company, whose diverse interests in retail, property, banking, and investments in high-growth sectors, delivered a robust performance in 2017 with consolidated revenue growth of 9% to PHP396.1 billion (US$7.9 billion) and consolidated net income of PHP32.9 billion (US$652.7 million).  In the first half of the year, SM delivered a 9% increase in consolidated net income to PHP18.1 billion (US$ 348.3 million) and consolidated revenue rose 12% to PHP204.9 billion (US$3.9 billion).

SM President and Chief Executive Officer Frederic DyBuncio said the company’s first half results reflected the robust performance of the property business, which contributed about 45% to the consolidated net income.  Banking businesses BDO Unibank (BDO) and China Banking Corporation (China Bank) contributed 33% while retail businesses contributed 22% driven by particularly strong results and high-margin growth from specialty retailing.

Strong business portfolio

This year marks the 60^th anniversary of SM since visionary tycoon Henry Sy Sr. established his first shoe store in downtown Manila in 1958.  SM has evolved to become one of the most trusted brands today and a key conglomerate in the Philippines. 

SM enjoys a leadership presence across its core businesses – operating food, non-food, and specialty retail stores under SM Retail; property through SM Prime Holdings which runs 71 malls in the Philippines and seven in China and holds interests in offices, residences, hotels, and convention centers and tourism-property developments; and banking with BDO, the country’s largest in terms of total resources, loans, and deposits; and China Bank, the sixth largest bank.

Aside from the accelerated expansion of its main businesses, SM continues to bolster its nationwide presence by organic growth and maximizing opportunities through strategic partnerships.  “We’re always on the lookout for growth opportunities and ensure that we constantly innovate to keep up with our ever-changing market,” says DyBuncio.

SM’s strong cash flows and healthy balance sheet reinforce the group’s ability to pursue aggressive expansion and scale new opportunities over the medium term.   SM continues to invest in high-growth sectors to create more value and bolster expansion for the group – growing the company’s total assets by 11.4% to PHP960.1 billion (US$19.04 billion) in 2017. 

SM has equity investments in complementary businesses such as integrated resorts through Belle Corporation and mall development through Citymall Commercial Centers.  In recent years, SM invested a 30.5% stake in 2GO Group, the country’s largest end-to-end logistics solutions provider, and a 61.2% holding in Philippines Urban Living Solutions, developer of MyTown, co-living micro condominiums for young urban professionals.

“These businesses cater to huge and underserved customer bases offering differentiated business models, competitive advantage, and strong synergies with our businesses,” says DyBuncio.  “We are focused on sustaining our growth and delivering more value through our growing core businesses and strategic investments that will accelerate expansion for the group.”

DyBuncio added that SM is reaping the benefits of the country’s growth prospects that fuel the group’s potential to pursue organic growth, capture further growth opportunities and ride on the economy’s sustained expansion.  “We remain focused on delivering on our long-term aspirations while managing growth over the medium-term.  Likewise, we are confident in the underlying growth drivers of the Philippine economy and we are here to support the country’s development agenda and be a catalyst for growth through our growing investments.”