Tuesday, November 17, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
Sy-led SM Investments Corp. (SMIC) is confident the local economy will continue to remain robust in the next five years, disclosing yesterday that it plans to invest as much as P211 billion until 2014.
In a press briefing, SM Investments Chief Finance Officer Jose T. Sio said the expansion of the holding company’s five core businesses will likewise assure that it would be able to double both profits and revenues after five years.
“If you look at our country, we have all the resources including human resources. Consumer demand also always follow [the state] of the country’s economy,” Mr. Sio said, adding that the country has proved its resiliency during economic downturns.
Mr. Sio said the bulk of the budget would continue to be used for the expansion of property developments, retail outlets and malls locally and in China. The strategy in China is to open one every year, but SM Investments will likely boost this to three malls a year three to four years from now.
There is also a possibility that the holding company will bring to China its property and banking businesses to better serve the Filipinos living overseas.
SMIC has five core businesses -- retail (SM Retail, Inc.), malls (SM Prime Holdings, Inc.), banking (Banco de Oro Unibank, Inc. and China Banking Corp.), property (SM Land, Inc.) and hotel and entertainment.
Its retail unit contributes the biggest to the revenue of the holding company at 18% of the total, followed by mall operations (11%) and real estate and tourism (5%). Five years from now, the property and hotel businesses should start contributing significantly to SM Investments’ topline, Mr. Sio said.
“We remain aggressive in our business but we remain open to opportunities that are acceptable to us. We will give priority to these five sectors but [industries] that can have a strong synergy with these sectors [will also be studied],” he said.
From January to September, profits of SM Investments grew by 14% to P10.8 billion, while revenues climbed by more than a tenth to P110.9 billion. For the year, Mr. Sio said the company is looking at a P150-billion to P160-billion topline and a P15.5-billion bottom line.
“[Our] nine-month results affirm our growth track over the medium term as it is achieved amid a challenging global business climate,” SM Investments President Harley T. Sy said.
“SM’s [five] core businesses mirror the strengths of the Philippine economy amid the global financial crisis,” he added.
The company’s retail business reported a net income of P3.1 billion during the period, up by 37% over the same period last year. The non-food group composed of the SM Department Stores contributed 41.6% while the food group, composed of SM Supermarkets, SM SaveMore stores, SM Hypermarkets and Makro outlets, accounted for the rest.
SM Investments has 35 department stores, 26 supermarkets, 20 SaveMore branches, 18 hypermarkets, and 12 Makro outlets. It plans to open one more department store, supermarket and hypermarket and five new SaveMore branches.
Profits of SM Prime -- the country’s largest shopping mall developer and operator -- meanwhile grew by 8% to P5.1 billion during the period.
Mr. Sio said the company plans to open another mall before the year ends and another five mid-sized malls next year in provincial areas (Calamba in Laguna, Novaliches in Quezon City, Tarlac, Masinag in Antipolo and San Pablo in Laguna), bringing its total for next year to 41 malls.
Banco de Oro meanwhile closed the nine-month period with a net income of P4 billion, 159% higher over last year. Sister China Bank on the other hand saw profits climb by 40.7% to P3.2 billion from January to September.
Banco de Oro is the country’s top bank in terms of assets, total deposits and net loans and receivables.
Net income from the SM property unit likewise grew by 42% to P1.7 billion during the period, with residential arm SM Development Corp. accounting for the bulk. It was followed by the leasing activities of the commercial properties group and resort projects of Costa del Hamilo, SM’s tourism vehicle which is developing the Pico de Loro Cove in Nasugbu, Batangas.
SM Development has seven ongoing projects and plans to launch five more projects before the year ends. The group’s youngest core business -- hotel and entertainment -- will further broaden SM’s range of tourism-related products and services.
“This will further strengthen the group synergies and added value within SM businesses by providing additional foot traffic to SM malls and stores, harnessing value of existing land assets and creating new avenues for SM’s brand franchises,” SM Investments said.
Shares in SM Investments declined by P5.00 to P322.50 apiece yesterday. -- Kristine Jane R. Liu
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