Published in The Asset, September 2018 Issue
SM Investments Corporation’s (SM) growing interests in retail, property, banking, and its strategic stakes in high-potential sectors provide the group’s sustained growth momentum as well as the potential for further growth opportunities.
Amid a fast-changing economic landscape and a challenging business environment in the region, one of the Philippines’ 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.
2018 marks 60 years of SM since visionary founder, Henry Sy, Sr. established his first shoe store in downtown Manila in 1958. SM has evolved to become one of the top conglomerates in the Philippines today.
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). About 45% of consolidated net income is attributed to property 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,” says SM President and Chief Executive Officer Frederic DyBuncio.
Delivering Shareholder Value
SM enjoys leadership presence across its core businesses – operating food, non-food and specialty stores under SM Retail; property through SM Prime Holdings (SM Prime); which runs 71 malls in the Philippines and seven malls in China and holds interests in offices, residences, hotels and convention centers and leisure or tourism-property developments; and banking with BDO Unibank, the Philippines’ largest bank and China Banking Corporation (China Bank), the sixth largest bank.
SM is accelerating 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.
In retail, SM continues to introduce innovative retailing concepts and exciting merchandise, including specialty retail stores that deliver high-margin growth for its portfolio. SM Retail businesses are spread across its department store under THE SM STOREs, multi-format retail business under the SM Markets, which includes SM Supermarket, Savemore, WalterMart and Alfamart; and specialty retailing which includes Ace Hardware, Toy Kingdom, Baby Co., Kultura, Watsons, Our Home, Crate & Barrel, Uniqlo and Miniso, among others. “We’re always on the lookout for growth opportunities and ensure that we constantly innovate to keep with our ever-changing market,” says DyBuncio.
In banking, BDO and China Bank continue to execute their respective growth strategies to capitalize on their strong business franchise and expand to high growth areas and underserved segments. For SM’s property arm, SM Prime bolstered its mall development and residential projects in various progressive key areas in the Philippines and expanded its presence in Manila that largely contributed to the company’s double-digit growth across its businesses.
Aside from accelerating its core businesses, SM has bolstered its investments in complementary businesses that provide attractive financial returns. These include equity investments in integrated resorts through Belle Corporation and mall development through CityMall Commercial Centers; and in recent years, SM invested in 2GO Group, the Philippines’ largest end-to-end logistics solutions provider, and in Philippines Urban Living Solutions (PULS), the developer and operator of co-living micro condos, MyTown. These new investments provide SM with additional long-term growth and are expected to complement solid returns for the group in 2018.
“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. “We are confident in the underlying growth drivers of the Philippine economy and we are here to support the country’s development through our growing investments.”