SM Charts New Growth in the Philippines through Equity Investments

SM Charts New Growth in the Philippines through Equity Investments

Published in Euromoney Magazine, April 2018 Issue

SM Investments Corporation (SM), one of the Philippines’ top conglomerates, is mapping out a new growth track in step with the country’s sustained economic expansion.

From a 60-year old brand that traces its roots to retail from the first shoe store of founder Henry Sy in downtown Manila in 1958, SM has continued to evolve from its core business of retail, property and banking into other investments.

These businesses create opportunities for increased market penetration nationwide. Its core businesses are in retail through department store brand THE SM STORE, supermarkets under SM Markets and other food store formats such as WalterMart and minimart Alfamart. It is also in specialty retailing through Ace Hardware, SM Appliances, Toy Kingdom, Baby Co., Kultura and Our Home.

SM’s property arm SM Prime Holdings holds interests in malls, offices, hotels and convention centers as well as in leisure or tourism-related properties. It also builds residences through SM Development Corporation. In banking, SM owns BDO Unibank, Inc. and China Banking Corp., the largest and seventh largest banks in the country respectively.

In recent years, SM ventured into complementary businesses that can potentially enhance group synergies and capture high-growth opportunities that are poised to be market leaders. These include integrated resorts through Belle Corporation, copper mining through Atlas Consolidated Mining and Development Corporation, community mall development through CityMall and more recently in logistics giant 2GO Group, as well as in lifestyle dormitory chain MyTown.

“SM aims to unlock the value of the companies under its equity portfolio. We believe in developing highly competitive companies, supporting them with resources and skills to realize their potential,” SM President Frederic DyBuncio said.

Meantime, the investments in new sectors are expected to fuel higher growth in 2018 which should complement solid returns from SM’s core businesses.

SM reported a 6% growth in net income to PHP32.9 billion at yearend from PHP31.2 billion in 2016. Consolidated revenues rose 9% to PHP396.1 billion in 2017 from PHP363.4 billion last year. Property contributed the most at 40% of total earnings, with banks comprising 38% and retail at 22%.The growth is in line with the country’s economic expansion as reflected by GDP which accelerated 6.7% in 2017, still one of the fastest-growing economies in the region.

“The Philippines’ robust economic expansion gives SM further momentum to chart new growth opportunities. As we continue to focus on our main business lines, we also recognize that the economy is evolving rapidly where our recent investments in new sectors are poised to meet the changing market needs,” said Mr. DyBuncio.