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SMDC hikes profit goal for 2012, expects up to 25% growth

Posted on June 04, 2012 09:22:16 PM [ BusinessWorld Online ]

SM DEVELOPMENT Corp. (SMDC) expects profits to grow faster than original estimates after recording steady sales growth so far for January to April, an official said.

“We did P4.18 [billion] last year. We are looking at doing 20-25% [higher this year],” SM Development President and Chief Executive Rosaline Y. Qua told reporters in a chance interview last week.

“We are based on percentage completion. As construction goes on, we are going to know how things will come along,” she said.

“We are bullish on how things are,” Ms. Qua added.

The new profit guidance compares against the 15-20% growth target disclosed earlier for both profits and sales this year.

The new target is nevertheless slower than the 38% hike the Sy-led property developer recorded in 2011 on the back of strong revenues from real estate operations.

The upbeat outlook comes as the company said it has sustained growth seen in the first quarter.

“[We are] doing P3 billion a month. We were able to sustain that in April,” she said. “We did around P3.55 billion in April.

The May figures, she said, “were also looking good.”

Ms. Qua said the company’s sales outlook remains bullish despite reports of a looming oversupply of condominiums.

“It is a whole cycle of demand,” she said. “From our end, we have kept within our business model which has worked.”

“It is not to build something the market would want, but something the market really wants,” she pointed out.

For 2012, the developer is planning to spend around P30 billion in capital expenditure and launch five residential condominiums in Metro Manila as well as the second phase of its existing Grass Residences.

These projects, which will have an estimated total market value of P37 billion, will add to its current portfolio of 15 SM Residences projects and two projects under M Place.

Expansions are also set for SM Development’s Wind, Jazz, and Field Residences, as well as M Place @ South Triangle.

This, as SM Development hiked its first-quarter net income by more than a third, driven by double-digit uptick in the value of pre-sales first quarter of the year.

The company’s consolidated net income rose by 33% to P1.21 billion from P916 million in the same period last year, reflecting a 59% year-on-year growth in the value of pre-sold units to P8.97 billion in the quarter.

This, however, is slower than the 45% hike the company notched last year coming from a P632.4-million net income in the first quarter of 2010.

For the first quarter, SM Development pre-sold 3,684 condominium units, up 51% from year-ago levels, a disclosure noted.

Consolidated revenues increased by 72% to P5.83 billion, a bulk of which were comprised of revenues from real estate operations that added 72% to P5.61 billion versus P3.26 billion, year on year.

Shares of SM Development fell by 2.28% to P6 apiece yesterday. -- Cliff Harvey C. Venzon

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