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SM Development to hike profit target this year to P4 billion

Posted on June 09, 2011 10:47:23 PM [ BusinessWorld Online ]

SM DEVELOPMENT Corp., the property arm of the Sy-owned mall and banking conglomerate, is looking at revising its profit target for 2011 upwards after enjoying brisk sales so far, an official said late on Wednesday.

“We are quite optimistic we will be able to [hit P4 billion],” Rosaline Y. Qua, senior vice-president and chief operating officer of SM Development, told reporters at the sidelines of a sales event.

This is higher than the developer’s target of growing profits by up to 20% to P3.6 billion by yearend. Five new project launches backed by robust demand had prompted the company to announce this goal back in April.

“But it is also very guarded because we also have to check on the construction progress of our projects,” Ms. Qua clarified.

“Based on our last check, we are beyond what we expected for the first five months. We are pretty happy with how things are coming along,” she added.

Ms. Qua said the company will firm up revised profit projections by end-June.

From January to May, the company reportedly posted higher sales buoyed by demand from overseas Filipinos.

“We have started to focus strongly on our international sales... When we started this business, it was not really something we thought would grow this much,” Ms. Qua said.

The property firm sells residential units to Filipinos in Europe, United States, Singapore and Malaysia.

To date, the local market accounts for 75% to 80% of the sales, she said.

“We have structured ourselves progressively in such a way that aside from being able to really grow our local sales, we are focusing further on our international sales,” Ms. Qua said, adding that a 50-50 mix is the ideal for SM Development.

Ms. Qua said the company targets selling 11,000 to 12,000 units this year from 10,000 units last year, adding that several licenses to sell are expected to be issued by July at the latest.

“SM Development can maintain that momentum unless there are interest rate hikes because the property sector is reactive to it,” Freya B. Natividad, investment analyst at brokerage firm, said in a telephone interview yesterday.

Asked about fund-raising efforts, Ms. Qua said the company has yet to peg a timetable for a share sale announced earlier.

In January, SM Development said it was planning to raise as much as P10 billion through the equity market in the first half to bankroll expansion here and abroad, particularly in China.

Last year, SM Development raised P26.5 billion from corporate notes and stock rights offering.

“We have enough funds to continue with what we are doing. Land banking is something we continue to do,” Ms. Qua said.

Shares in SM Development, which posted a 45% increase in consolidated net income to P916.3 million in the first quarter amid brisk sales, closed 0.89% or eight centavos lower at P8.90 apiece yesterday. -- Neil Jerome C. Morales

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