SM Prime’s Net Income Grew 13% in Q12017

(05 May 2017. Pasay City, Philippines) SM Prime Holdings, Inc. (SM Prime), the Philippines’ leading integrated property company reported a net income growth of 13% to PHP6.6 billion from PHP5.8 billion last year. This was on the back of a 12% growth in consolidated revenues to PHP20.5 billion from PHP18.2 billion. Overall operating income increased by 14% to PHP9.6 billion from PHP8.4 billion in the same period. The growth was largely due to rental revenues from mall expansions in the past two years as well as higher real estate sales and construction accomplishments of residential projects since 2014.

“Our strong performance in the first quarter gives us high confidence that we are on track to meet our growth targets in terms of revenues and income for the full year. As we continue our strategic rollout of projects across our properties, we are optimistic that our growth will be sustained by the overall expansion of the Philippine economy,” SM Prime President Jeffrey Lim said.

Mall Operations

In the first quarter of the year, SM Prime’s overall mall revenues, which accounted for 62% of consolidated revenues, went up by 11% to PHP12.7 billion from PHP11.4 billion last year. Mall rentals grew by 10% to PHP10.7 billion from PHP9.7 billion driven by the additional retail spaces of 1.1 million square meters (sqm) of gross floor area (GFA) added since 2015. Excluding the new malls and expansion, same-mall sales grew by 7%. Cinema and event ticket sales increased 16% to PHP1,230 million from PHP1,059 million due to higher international movie and event ticket sales. Revenues from amusement and merchandise sales jumped 27% to PHP763 million from PHP602 million on the back of improvement on merchandise sales and new amusement centers in the company’s newer malls.

Meanwhile, overall mall operating income rose by 12% to PHP7.0 billion from PHP6.3 billion, while operating margins moved up to 56% from 55% in the period under review.

SM Prime currently has 60 shopping malls in the Philippines and seven in China with a combined GFA of 9.0 million sqm. This year, the company is slated to open five new malls in the Philippines. These are SM CDO Downtown Premier in Cagayan de Oro, SM Cherry Antipolo in Rizal, SM Center Tuguegarao Downtown in Cagayan, SM City Puerto Princesa in Palawan, and SM Center Lemery in Batangas. By the end of 2017, SM Prime will have 65 malls in the Philippines and seven in China.

Residential Development

SM Prime’s residential group posted a 6% growth in revenues to PHP6.0 billion from PHP5.6 billion in the same period last year. The residential group contributed 29% of the overall revenues. Revenue growth can be traced to the construction accomplishments of SM Development Corporation (SMDC) projects launched from 2014 to 2015. These are Shore 2 Residences in Pasay City, Air Residences in Makati City, Cool Residences in Tagaytay City, Fame Residences in Mandaluyong City, and South Residences in Las Piñas City.

In line with this, consolidated costs of real estate grew by 7% to PHP3.1 billion from PHP2.9 billion mainly due to an increase in recognized real estate sales. Operating income expanded by 6% to PHP1.7 billion from PHP1.6 billion. Gross profit margin improved to 48% from 47% while net income margin was maintained at 23%.

SMDC’s reservation sales surged by 52% to PHP12.3 billion from PHP8.1 billion in the first quarter of the year. This translates to a 35% improvement in unit sales to 3,988 units from 2,949 units. The strong sales take-up was generated from residential projects, namely Shore 2 Residences, Shore 3 Residences, S Residences in Pasay City, and Air Residences in Makati City.

For 2017, SM Prime is scheduled to launch 15,000 to 18,000 residential units that include high-rise, mid-rise, and single detached housing. These projects will be located in Metro Manila and other key cities in the provinces.

Commercial Properties

SM Prime’s Commercial Properties Group, which contributed 4% to consolidated revenues, posted a 16% increase in revenues to PHP749 million from PHP646 million in the first quarter of 2017. Operating income expanded by 30% to PHP656 million from PHP504 million which brought the operating income margin to 88% from 78%. The growth is attributed to the new rental revenues from FiveE-comCenter, which is almost fully occupied.

SM Prime has six office buildings with a combined GFA of 383,000 sqm. ThreeE-Com and FourE-Com Centers are currently under construction with an estimated GFA of 288,000 sqm. These additional office buildings are scheduled for completion in 2018 and 2020 respectively.

Hotels and Convention Centers

SM Prime’s Hotels and Convention Centers recorded an 82% revenue growth to PHP1.1 billion in the first quarter of 2017 from PHP0.6 billion of the previous year. Operating income rose by 193% to PHP266 million from PHP91 million while operating income margin likewise improved to 24% from 15%. The revenue growth came from the higher occupancy rates and the opening of Conrad Manila in Pasay City last June 2016.

To date, SM Prime has six hotels with over 1,500 rooms, four convention centers and three trade halls in its portfolio.

SM Prime remains committed to its role as a catalyst for economic growth, delivering innovative and sustainable lifestyle cities, thereby enriching the quality of life of millions of people.

For further information, please contact:

Alexander Pomento
Vice President, Investor Relations
SM Prime Holdings, Inc.
Tel. no.: +632 862 7940