SMIC sets record P65-B capex for 2013

MANILA, Philippines - SM Investments Corp. (SMIC), the investment holding firm of mall and banking tycoon Henry Sy, has allotted a record P65 billion for its capital expenditures next year.

The massive spending budget will allow the conglomerate to continue growing its profits by 12 to 15 percent in 2013 to 2015, company executives said.

In the nine months ending in September this year, SMIC posted a 14-percent uptick in net income on the back of strong performances from its banking and retail units.

“We are looking at P65 billion in total [capital expenditures]. About one-third of that will be funded through equity or loan issuance and two-thirds will be internally funded,” SMIC chief finance officer Jose Sio said in a briefing.

He said bulk of the record budget, which eclipses the P56 billion spending this year, will be allotted for malls and property development.

Specifically, mall developer and operator SM Prime Holdings Inc. will spend P30 billion next year.

Jeffrey Lim, executive vice-president and chief finance officer of SM Prime, said the company set aside P5 billion to P6 billion for land banking, particularly outside Metro Manila.

“Given the low interest rate environment, we will probably tap the debt market,” Lim said, adding that P12 billion to P15 billion of the capital expenditures will be secured through debts.

SMIC boost president Harley Sy said for the entire year, the conglomerate expects to boost its profits by 12 to 15 percent.

In its 2013-2015 plan, Sy said SMIC is aiming to grow by another 12 to 15 percent annually that will be supported the company’s continuous expansion.

In January to September, SMIC profits went up 14 percent to P16.1 billion from P14.2 billion in the same period last year while revenues rose 13 percent to P157.9 billion from P139.2 billion.

“The growth in earnings was attributable largely to the strong performance of the banks, malls and retail operations,” SMIC said.

 “While SM’s strong financial performance is in part a reflection of a robust Philippine economy, it is equally a reflection of our continuing efforts to deliver value across our core businesses,” Sy said.

SMIC derived 36 percent of its income from banking (BDO Unibank Inc. and China banking Corp.), 26 percent from retail operations (SM Retail), 23 percent from malls (SM Prime) and 15 percent from property development (SM Development Corp. and SM Land).

In the nine-month period, BDO posted a 38-percent rise in unaudited net income to P10.5 billion from P7.6 billion last year.

For SM Retail, its net income rose 6.7 percent to P4.1 billion while sales grew 8.7 percent to P110.8 billion.

For this year, SM Retail has added 25 new stores composed of five SM Department Stores, four SM Supermarkets, four SM Hypermarkets and 12 SaveMore stores. To date, the group now has a total of 193 stores.

“We still commit to 20-30 new stores annually through organic growth,” said SM Retail executive vice-president Robert Kwee.

SM Prime’s profits increased15 percent to P7.4 billion from P6.4 billion as revenues jumped 15 percent to P22.1 billion.

To date, SM Prime has 46 malls in the Philippines with a gross floor area of 5.5 million square meters.

Consolidated net income of SM Land grew 11 percent to P4.2 billion from P3.8 billion while SM Development posted a 5.7-percent growth in earnings to P3.3 billion.

The business units of SMIC are poised to expand next year, officials said.

SMIC also owns SM Hotels and Conventions Corp.

“We plan to open at least five Park Inn hotels for the next six to seven years. It could be more,” said SM Hotels and Conventions EVP Reynaldo Villar.

SM Hotels and Conventions plans to have 1,019 hotel rooms by 2013. To date, it has 24,000 square meters of convention space.