Sustaining Growth and Adding Value in the Philippines

SM is developing world-class malls that are among the biggest in the world.BDO continues to acquire smaller banks. In retail, SM focuses on innovation, with a wide range of merchandise and global brands.

Since 1958, when SM Investments Corporation (SM) was founded by Chairman Henry Sy, Sr., it has grown from a modest shoe shop into one of the largest and best known companies in the Philippines.

SM’s retail operations enjoy a strong brand franchise, consisting of THE SM STORE and its food retail chains: SM Supermarket, SM Hypermarket, Savemore and WalterMart stores. As leading players in their respective markets, they provide consumers with an aspirational lifestyle, reliable service quality products and convenience.

SM Prime, the group’s listed property arm, has become one of the largest real estate conglomerates in the Philippines with interests in malls, residences, office buildings, resorts, hotels and convention centers. It also has a growing presence in China where the company has developed six malls in second- and third-tier cities, a strategy that the company will continue to pursue as it sets its sights on further expansion.

In banking, SM has the largest footprint of any group in the Philippines. BDO Unibank is the biggest bank in terms of total loans and deposits, and is the market leader in key business segments such as investment banking, asset management, private banking and leasing. China Banking Corporation, SM’s other listed subsidiary is uniquely positioned to service the needs of emerging companies and small- and medium-scale enterprises building on its long-term relationships.

Financial Performance

For the first half of 2016, SM unveiled another impressive set of financial results. Consolidated net income rose by 11 percent to P15 billion while consolidated net revenues increased by 8.5 percent. By any standards, SM’s track record over the past 10 years has been remarkable. Between 2005 and 2015, consolidated earnings rose by a compounded annual rate of 13.5 percent, significantly outperforming the average returns for listed companies on the Philippine Stock Exchange.

The sharp rise in earnings is partly explained by the country’s burgeoning middle class and the exponential demand for retail, property and banking services. But is also reflects the company’s foresight in recognizing changing consumer trends like the evolution of shopping malls into weekend destinations and community centers.

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

Strategy

SM is constantly on the lookout for new growth opportunities to ensure that its core businesses enjoy leading positions. This can take the form of strategic partnerships or acquisitions to optimize synergies and enter new growth areas in the provinces.

Earlier this year, SM announced the merger of SM Retail with Sy family-owned speciality store assets comprising over 1,400 outlets. The merger is widely expected to create value and boost earnings given the strong competitive position of the speciality stores and their synergies with SM malls. “With the merger of our retail businesses we now cater to a much wider range of consumer needs and we look forward to benefiting from increasing consumer spending”, said Harley T. Sy.

Recently, BDO Unibank also secured regulatory approval for the acquisition of Generali Pilipinas Life Assurance Corp. since renamed BDO Life Assurance. This is part of efforts by the bank to increase its focus on the insurance business in order to boost its presence in the middle income market.

But SM’s mission goes beyond providing excellent service to its customers. The group’s philosophy is also to uphold the highest standards of corporate governance and transparency while promoting environmental sustainability.

Long Term Vision

With the Philippine economy projected to grow at around 5 to 6 percent a year, SM continues to see massive opportunities ahead.

SM’s long term vision is to build world-class businesses that are catalysts for development in the communities it serves. To achieve that vision it will continue to adhere to its core values of leadership, hard work and prudence. Senior management is confident that these values will drive the company forward to create synergies and deliver optimal returns for investors.

Contact Information
Ms.Corazon P. Guidote
Senior Vice President for Investor Relations
SM Investments Corporation
E-mail: cora.guidote@sminvestments.com
Tel.+632-857-0117

Source: Institutional Investor/ Advertorial