Published in Asiamoney Magazine, September 2018 Issue

SM Investments Corporation’s growing interests in scale retail, property, banking, and its strategic stakes in high-potential sectors provide the group’s sustained growth momentum and potential for more growth opportunities.

From a fast-changing economic landscape to challenging business environment in the region, one of the Philippine leading conglomerates, SM Investments Corporation (SM) remains positive about the country’s economic prospects.  The group is pushing ahead by expanding its domestic footprint in the Philippines and pursuing investments in high-potential sectors to sustain its growth.

With its diverse interests in retail, property, banking and equity investments, SM delivered robust performance in 2017 with consolidated revenue growth of 9% to PHP396.1 billion (US$7.9b) and consolidated net income of PHP32.9 billion (US$652.7m).  SM sustained its growth trajectory in the first half of the year delivering 9% increase in consolidated net income to PHP18.1 billion (US$348.3m) and posting 12% increase in consolidated revenues to PHP204.9 billion (US$3.9b).

SM President and CEO Frederic C. DyBuncio said that the company’s first half results reflected the robust performance of the property business which contributed 45% to the consolidated net income, while banks and retail businesses contributed 33% and 22%, respectively. 

“We are encouraged by the results of the first half, driven by the strong performance of retail and property, particularly the residential business. Our results show the strength of the economy and consumer sentiment but we remain vigilant about inflationary pressures,” said DyBuncio.  He added that SM is optimistic that consumption will remain resilient.

Well-Positioned for growth and shareholder value

This year marked six decades since SM visionary founder, Henry Sy, Sr. established his first shoe store in downtown Manila in 1958.  From a shoe store then, SM has taken inspiration from millions of its customers that fueled its growth and has evolved to become one of the top conglomerates in the Philippines today.

SM enjoys leadership presence across its core businesses that operate food, non-food and specialty stores in its retail portfolio; property through SM Prime Holdings, Inc. (SM Prime) that operates 70 malls in the Philippines and seven malls in China and holds interests in offices, residences, hotels and convention centers, leisure or tourism-property developments; and banking with BDO Unibank, Inc. (BDO) as the Philippines’ largest bank and China Banking Corporation (China Bank), the 6th largest bank. 

SM continues to accelerate its nationwide presence by maximizing opportunities through strategic partnerships and expansion in multi-format growth strategy in retail especially in regional and underserved areas of the country.  Likewise, it continues to introduce innovative retailing concepts and exciting merchandise, including specialty retail stores that deliver high-margin growth for its retail portfolio.

In banking, BDO and China Bank continue to execute its growth strategy to capitalize on its strong business franchise and expand to high growth areas and underserved segments.  For SM’s property arm, SM Prime has bolstered its expansion projects in various progressive provincial areas in the Philippines and presence in Metro Manila that contributed to the company’s double digit growth across its businesses.

According to DyBuncio, SM is reaping the benefits of the country’s bright economic prospects which increase the group’s potential to pursue organic growth, capture new growth opportunities and ride on the economy’s steady growth.  He added that SM continues to invest in high-growth sectors to create more value and accelerate expansion for the group — growing the company’s total assets by 11.4% to PHP960.1 billion (US$19.04b) in 2017.

Aside from accelerating expansion of its core businesses, SM has invested in complementary businesses that offer attractive financial returns. These include equity investments in integrated resorts through Belle Corporation and mall developent through CityMall Commercial Centers; and in recent years, SM invested in 2GO Group, Inc., the Philippines’ largest end-to-end logistics solutions provider and in Philippines Urban Living Solutions, Inc. (PULS), the developer and operator of lifestyle dormitory chain, MyTown. 

“These new investments provide SM with additional long-term growth and are  expected to complement solid returns for the group in 2018,” said DyBuncio.  “We remain focused on delivering on our long-term aspirations while managing growth in the medium-term.  Also, we are confident in the underlying growth engines of the Philippine economy and we are here to support the country’s development through our growing investments.”