By Zinnia B. Dela Peña (The Philippine Star) Updated April 29, 2010 12:00 AM
MANILA, Philippines - Bent on further building its strengths and synergies among its growing businesses, SM Investments Corp. (SMIC), the listed investment holding firm of the family of retail magnate Henry Sy Sr., has set a P40.6-billion capital expenditure budget for this year, most of which would go to the development of residential condominium buildings and new malls.
In a press briefing following the company’s annual stockholders’ meeting yesterday, SMIC president Harley Sy said this year’s capex, which is 27 percent higher than the amount spent in 2009, includes the group’s expansion in China.
Of the total budget this year, P15 billion will be channeled to property development; P12.1 billion for the construction of five new malls including one in China; P6.2 billion for 25 retail stores; P4.9 billion for hotels and convention centers; and P2 billion for its banks.
SMIC chief finance officer and executive vice-president Jose T. Sio said the group has cash holdings of about P15 billion and that it may issue convertible shares when funding need arises.
Sio said the group is upbeat on its financial prospects this year given strong first quarter results which showed a 14-percent jump in net earnings from P4.2 billion to P4.8 billion. Consolidated revenues rose 15 percent to P40.3 billion from P35.2 billion while EBITDA grew 19 percent to P10 billion, for an EBITDA margin of 25 percent.
He said the group’s net earnings are expected to grow at least 10 percent this year amid an improving global business climate. Revenues are likewise seen to rise 15 percent in 2010.
Last year, SMIC’s net earnings reached P16 billion, up 14 percent from the year earlier level. Consolidated revenues amounted to P160.1 billion or an increase of nine percent from the previous year.
“We are off to a good start this year, given the very strong performance of all our core businesses. This reinforces our confidence in the country’s continued economic recovery, one that can possibly sustain our growth momentum throughout the year,” Sy said.
The banks, particularly Banco De Oro Unibank Inc. (BDO), delivered the highest growth and contributed the most to group’s total net income, accounting for 32 percent. This was followed by retail merchandising and shopping malls, which contributed 29.2 percent and 25.5 percent, respectively. Real estate came in next, with 13.2 percent.
The retail group reported a 16.5 percent growth in net income during the period under review, translating to an average net margin of 3.7 percent or an increase of 3.6 percent from the year earlier level. Total sales went up 15.3 percent to P29.4 billion.
Of the total retail sales, the non-food group, which is composed of SM Department Stores, contributed 39 percent, while the food group, composed of Supermarkets, SM Save More stores, SM Hypermarkets and Makro outlets, contributed 61 percent.
Banking unit BDO doubled its net income in the period January to March this year to P2.1 billion from P1 billion, largely due to the sustained growth in operating income.
For this year, the SM Food Group is putting up 20 new stores in and outside Metro Manila to add to its existing portfolio of 83 branches nationwide.
For its hotel business, the group is building Azurea, a plush 150-room hotel at the Pico De Loro Cove at Hamilo Coast in Nasugbu, Batangas.
SM Hotels already operates the Taal Vista Hotel in Tagaytay City and the Beach and Country Club of Pico de Loro. It also now dominates the convention business with the SMX Convention Center at the Mall of Asia complex and the Cebu Trade Hall.
It continues to oversee the construction and completion of its 400-room, five-star Radisson Blue Hotel Cebu, which strategically located right beside SM City Cebu. The hotel is scheduled to open in the latter part of the year.
The group is also working on the development of another 400-room, five-star hotel to be built at the Mall of Asia complex to complement the SMX Convention Center.
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