Published in Forbes Asia, October 2018 Issue
The Philippine holding company remains aggressive as ever—sustaining market leadership in its core businesses of property, banking, and retail, while delivering more value to shareholders with strategic investments in high-potential areas.
This year marks the 60th anniversary of visionary tycoon Henry Sy Sr. founding the shoe store that would evolve into one of the Philippines’ most agile conglomerates, SM Investments Corporation (SM) is showing no signs of slowing down.
The holding company, whose diverse business interests cover market-leading investments in retail, property, banking and other high-potential sectors, delivered solid numbers in 2017, with consolidated revenue of PHP396.1 billion (US$7.9 billion), up 9% year-on-year, and consolidated net income of PHP32.9 billion (US$652.7 million).
The current year is showing sustained momentum, with net income increasing 9% in the first half to PHP18.1 billion (US$348.3 million) from the same period last year and consolidated revenue rising 12% to PHP204.9 billion (US$3.9 billion). About 45% of current total earnings is attributed to property arm SM Prime Holdings, while its banking businesses BDO Unibank (BDO) and China Banking Corporation (China Bank) contributed 33%. SM Retail contributed 22%, driven by particularly strong results and high-margin growth from specialty retailing.
According to SM President and Chief Executive Officer Frederic DyBuncio, the Philippines’ steady economic environment and its demographic make-up spells a wealth of market opportunities for the conglomerate, whose plans are not only to extend its presence in Metro Manila but also to expand into underserved areas in the country.
“We are focused on sustaining our growth and delivering more value through our growing interests in our core businesses and strategic investments that will accelerate expansion for the group,” says DyBuncio.
Delivering Shareholder Value
SM is further energized to increase nationwide penetration by integrating more investments into its core businesses. “We continue to invest in opportunities to create value and growth,” says DyBuncio, adding that the company’s total assets grew by 11.4% to PHP960.1 billion (US$19.04 billion) in 2017.
Even amid the Philippines’ inflationary concerns, the SM group continues to see retail and property among the brightest spots in the Philippines, opening seven new malls outside Metro Manila, two THE SM STOREs, four SM Supermarkets, 28 Savemore stores, three SM Hypermarkets, seven Walter Mart stores and 159 specialty stores in 2017. Retail revenue grew 7.3% last year to PHP297.4 billion (US$5.9 billion), while property grew by 13.9% to PHP90.9 billion (US$1.8 billion) on the back of strong residential sales and increased mall revenue.
Both BDO and China Bank also recorded exceptional achievements last year—BDO posted a record net income of PHP28.1 billion (US$557.5 million) while China Bank registered consolidated net income of PHP7.5 billion (US$148.8 million)—anchored on sustained network expansion, focused customer service and robust business strategies.
Beyond the organic growth of its core businesses, DyBuncio says, “We’re always on the lookout for growth opportunities and ensure we constantly innovate to keep up with the ever-changing market. We keep our ears close to the ground and transform with the changing marketplace.”
Further bolstering expansion have been equity investments in high-growth potential companies, including a 30.5% stake in leading Philippine end-to-end logistics solutions provider 2GO Group and a 61.2% holding in dormitory provider to young urban professionals, Philippines Urban Living Solutions.
“These companies cater to huge and underserved customer bases, offering differentiated business models, competitive advantages and strong synergies with our businesses,” says DyBuncio. “We expect these investments to fuel higher growth in 2018 and should complement solid returns across the group. We intend to help them grow and to look for more emerging sector investment opportunities like these.”
Amid aggressive growth plans, 2017 also marked strategic transitions in SM’s top leadership, with DyBuncio succeeding as president and Jose Sio as chairman. In a message to SM’s shareholders, founder and Chairman Emeritus Henry Sy Sr. affirms the movement “further enhances professionalization within the group in preparation for the future,” and that as the conglomerate journeys toward its centennial, he remains “optimistic about the medium- and long-term growth potential of SM through investments in addition to the company’s core businesses.”
For more information, please contact
Mr. Paul Arcenas
VP, Planning and Corporate Communications
SM Investments Corporation
Tel. No. (632) 857-0100 local 1039