SM pursues expansion to tap huge Philippine potential

SM Investments Corporation (SM), one of the leading conglomerates in the Philippines, is optimistic about the country’s strong economic performance as it remains to be one of Asia Pacifies fastest-growing economies driven by accelerated infrastructure and consumer spending and gains in industry and service sectors.

In its bid to further grow and tap on the enormous potential of the country, SM is primed to earmark about PHP70 to 80 billion (USD 1.5 billion to 1.7 billion) worth of capital expenditures every year to support the growth of its market-leading assets in retail, property, and banking. Its medium-term growth strategy is clearly laid out, particularly in aggressively expanding its food retail business, property development, and both corporate and consumer lending activities.

In the first half of 2016, SM sustained its growth momentum with consolidated net income increasing by 11% to PHP 15.0 billion while consolidated revenues rose 8.5% to PHP151.1 billion.

“Our strong first half performance reflects continued economic growth, boosted in part by election spending. We continue to focus on cost efficiencies and operating margin improvements,” said SM President Harley T. Sy.

SM’s impressive track record can he largely attributed to its focused approach, fuelled by competitive strategies and innovation to meet the aspirations of growing urbanized cities in the provinces and increase in consumer purchasing power. It is maximizing opportunities across its businesses through strategic partnerships in retail, accelerated development and delivery of lifestyle cities or large-scale, well master-planned properties, and acquisitions in banking – as key strategies to fully optimize its synergies.

SM’s publicly-listed property arm, SM Prime Holdings Inc., posted a consolidated income of PHP12.6 billion while recurring net income increased by 12% year-on-year. It is geared towards provincial expansion for its mall development, while still largely focusing on Metro Manila and its suburbs for its residential and commercial development. It is well-positioned for a higher growth track given the country’s bright prospects.

SM Prime currently has 58 malls in the Philippines and six in China. By end of 2016, SM Prime’s total gross floor area for its malls will be at 8.5 million sqm. with the opening of two more malls with 60 malls in the Philippines, Its Commercial Properties Group presently has six buildings mostly at the Mall of Asia Complex with an estimated GFA of 371,000 sqm. Its residential arm, SM Development Corporation (SMDC), is set to launch an additional 6,000 to 8,000 units which are expected to generate higher sales uptakes. During the first half of 2016, SMDC reported a 20% increase in reservation sales of 8,091 units having improved its sale of ready-for-occupancy units in recent months.

SM also intensified its foray into tourism development with the launch of the 347-room Conrad Manila in June, located atop S’ Maison – a two-level upscale retail podium at the Mall of Asia Complex. This brings the total number of hotels in the company’s portfolio to seven with a combined 1,510 rooms.

In Retail, SM reported sustained growth in total sales of 9% to PHP105.1 billion, while net income rose 14% to PHP3.5 billion in the first half of 2016. SM Retail Inc. further boosted its retail portfolio with the merger of the Sy-family-owned specialty stores into SM Retail with over 1,400 outlets. The merger is expected to create greater value through scale and diversity in its portfolio and boost earnings given the strong competitive position of the specialty stores and their synergies with SM malls. Meanwhile, its food retail business continues to aggressively expand its footprint nationwide through a multi-format approach.

In banking, BDO Unibank, Inc. recorded an increase by 13% in net income to PHP 13.1 billion on broad-based improvement across the hanks businesses and a one-time gain from the consolidation of BDO Life. It remains to be the biggest bank in terms of loans, and deposits, and the market leader in key business areas. Another SM subsidiary, China Banking Corporation reported net income growth of 30% to PHP3.3 billion for the first half, driven by strong growth in its core and fee-based businesses.

With a well-balanced and diversified portfolio and healthy balance sheet, SM is committed to sustain its long-term growth and further increase its domestic footprint through world-class businesses that deliver optimal results for investors as well as keep its drive-in being a catalyst for a growth for the communities it serves.

For more information, please contact

Corazon P. Guidote
Senior Vice President, Investor Relations
Telephone: +632 857 0117
E-mail: cora.guidote@sminvestments.corp

Source: The Asset/ Advertorial