Merger of SM property units eyed

Sy family evaluating proposed consolidation

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HENRY SY SR.. INQUIRER file photo

The family of tycoon Henry Sy Sr. is considering an external proposal to consolidate property-related businesses, including residential property arm SM Development Corp. and flagship shopping mall unit SM Prime Holdings, into a single publicly listed entity.

The proposal was to fold SMDC and the family’s privately held SM Land Inc. into SM Prime to create a full-range property development arm that would combine residential, hotel, office and shopping mall businesses into one vehicle, Inquirer sources said.

“Some investment bankers are proposing this and the SM group is studying it,” a top official from the SM group told the Inquirer on condition of anonymity. No decision has been yet been made on the proposal, which the group is evaluating carefully.

Both SMDC and SM Prime are publicly listed companies and part of the country’s benchmark Philippine Stock Exchange index. Some stock market pundits are betting that even leisure estate and gaming firm Belle Corp., also majority-controlled by the Sy family, could be included if the family were to agree on the consolidation.

A prospective consolidation is seen creating a property company with stable recurring earnings from the shopping mall, hotel, office and tourism-oriented ventures while taking advantage of a favorable environment for residential development. SMDC has a market capitalization of about P82 billion while SM Prime has P328 billion. Belle, which is also part of the PSEi, is valued at P56 billion.

The combined market capitalization of all three companies is about P466 billion, potentially bigger than the P425-billion current market capitalization of Ayala Land Inc., the country’s largest property development company.

Shares of SM-related stocks have been rising in recent days on speculation that the consolidation of property interests would push through. The movement of the SM-related stocks are, in turn, helping to drive up the main-share PSEi to record highs.

As of yesterday, SMIC was the most valuable company in the stock market with 621.15 billion in market capitalization, slightly beating Philippine Long Distance Telephone Co.’s  615.76 billion.

SM Prime recently reported a 16-percent growth in its 2012 net profit to P10.53 billion on the back of revenues from new and existing malls, including those in mainland China. The company said it exceeded its profit growth target for a second straight year.

Total revenues for the year rose 14 percent to P30.73 billion while cash flow as measured by earnings before interest, taxes, depreciation and amortization (Ebitda) increased by 12 percent to P20.7 billion, for an Ebitda margin of 67 percent.

Although already a household brand in the Philippines, SM Prime has a growing revenue stream from overseas operations. Last year’s robust results included the operations of the five SM malls in China, in the cities of Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing. Shopping malls in China alone chalked up a net income of P1.1 billion in 2012, 24-percent higher than the bottomline in the previous year.

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  • Mario_Garcia

    The balloon will soon burst, trust me…. I can see it coming.

  • http://www.facebook.com/katipunan Andres Bonifacio

    Puro kayo DAKDAK…kung galit kayo sa SM or kay Henry Sy, I challenge you NOT TO GO TO SM Malls ever again…and encourage your family members to do so too! Kung hindi nyo kaya, huwag na kayo magreklamo!!!

    • http://pulse.yahoo.com/_V6JTYBZXUSXIDCD67ACZK7NUKM Joseph

      Best comment I’ve read all day.

    • sorbetero

      Just go and enjoy Ayala Centers ambiance or Robinson’s malls, if not the Festival mall at Alabang!

  • kismaytami

    Sana ilipat na lang niya ang mga malls niya sa tsina at nang mabawasan nang BONGGA ang trapik dito sa Pilipinas. Kung saan may mall itong tsekwang ito, siguradong doon matindi ang trapik, kahit sa mga probinsiya. Isa pa, hindi naman nakikinabang ang mga Pilipino niyang empleyado sa paglago ng kanyang negosyo dito sa Pilipinas.

    • Engineering_Student

      Hindi ba Pilipino ang mga empleyado ng SM? Kasi kung Pilipino naman eh di nakapagbigay sya ng trabaho sa kapwa natin lalo na yung mga taga probinsya.

      • Hagler

        Think in a bigger perspective .

    • Hagler

      you are a good observer bro.

  • NoWorryBHappy

    Mr. Henry Sy will NEVER give back to the country that made him rich.
    First of all he’s Chinese. The Chinese keep things to themselves.
    Secondly, he’s not Filipino.

    • http://pulse.yahoo.com/_JEMNLLYAP5EA7SM3A6QUOGV62Q Chris

      Chinese ethinicity yes, but still a Filipino Citizen

      • http://mikkieugenio.tumblr.com/ Paul Eugenio

        Bakit ba ang lakas ng galit niyo sa mga Intsik, kung tutuusin halos lahat tayo may traces of Chinese blood?

      • http://profile.yahoo.com/AIYSIJJOL4JNRLHXVTGUH3NYHM The Overlord

        Source? 

  • upupperclassman

    SMDC is poorly managed. Condominiums are built at wrong locations with mostly studios and 1 br. Sales has not increased and profit decreased in 2012. The merger is designed to hide the inefficiency and poor management of SMDC. Who will be the boss of merged companies? Big Boy or Hans?

    • antoncervantesjr

      mismo! malamang out na si big boy.
      hanap na lang siya nang bagong pagaabalahan, magaling naman sa start up.
      yun lang, pag operations na, kelangan nya ng magbitiw

  • tra6Gpeche

    Mr Henry Sy should start giving back to those who work for
    him. He is now a multi billionaire and the riches man in the Philippines.
    I don’t know if he considers himself as a Filipino or Chinese but whatever it
    is, his company should give those Filipinos who work in his company/companies
    better pay, security and benefits. Ignoring the progress and advancement of
    those who work for him makes him selfish and without sense of decency.
    Contractual employment should, at least, be abolished from his companies.
    Filipinos deserve to be treated with respect and dignity. Paging Mr. Henry Sy!

    • upupperclassman

      I agree fully with your observation. As of now, the Sy Group is the biggest contractual employer in the Philippines.

      • tra6Gpeche

        Dahil siguro sa walang pagtingin at pagkilala sa mga karapatan ng mga Pilipinong nagtatrabaho sa kanyang kompanya at dahil din sa walang magkalakas ng loob na magtayo ng labor union! Ang nasa isip ng mga Pilipino ay mabuti kaysa wala. Iyan ang tinatawag na kapit sa patalim!

      • Diablo_III

        katulad ng US car companies, before they had a strong union and it was the culprit of pulling down the company, because union workers abused their rights and were less productive. Japanese companies and workers are more industrious than their counterparts. 

    • http://profile.yahoo.com/VUDMB7OC25NYFIPUQCJYX3FQGE Elpidio

      Sa sobrang yaman ng sm parang di ko naririnig na ngbibigay cla sa charity? if im wrong, then im happy to be corrected…

      Yung ginagawa ng sm na hindi pag reregular ng mga emplayado nila, e parang mali at mukhang labag sa labor laws yan ah..pro ok na rin siguro kase kung contractual madami ang nbbgyan ng opportunity makapagtrabaho, yun nga lang pag nag exprie na ang contract nga-nga na naman ang mga nawalan ng trabaho…

      • tra6Gpeche

        Iyan ang sinasabing mabuti kaysa wala. Sa bandang dulo ay walang inaasahan ang mga kawani!  Ang dahilan ay mahina ang labor laws at walang labor union sa Pilipinas na nagtatanggol sa karapatan ng mga kawani. Kung mayaman at asensado ang kompanya, dapat asensado din at maayos ang kita at benepisyo ng mga empleyado. Sa sobrang yaman ni Mr. Sy, hindi makatuwiran at makatarungan ang contractual employment at katiting na sueldo! Kailangang unahin ang mga katayuan ng mga empleyado kaysa charity!

    • http://pulse.yahoo.com/_V6JTYBZXUSXIDCD67ACZK7NUKM Joseph

      Though I agree with you, let us not forget that people are not forced by SM to work for them. Their contractual employees willingly apply and accept the employment terms. If they don’t want the terms, they are free to leave and choose a different company. This is not totally SM’s fault.

      • http://mikkieugenio.tumblr.com/ Paul Eugenio

        I agree with you. Why blame Henry Sy? He’s old and inutile already, he’s sick. He’s not the ones telling management to contractualize their employees nor prioritize the Iglesia ni Cristo people.

      • tra6Gpeche

        Kabayan, these Filipinos have to eat and they are forced by necessity! Do you think that the family of Mr Sy will go bankrupt if they treat their workers with decency and respect? Is it human to take advantage of powerless and voiceless Filipinos in the Philippines? Where is Mr. Sy’s  soul? Or does he have a soul?

  • JKG_HSA_VOSA

    Sa ngayon, maganda tingnan sa papel. You have the cashflow from the leasing group supporting the land acquisition and development/construction groups while they turn in good sales numbers. What if the property market really does move in cycles? Should SMDC sales plateau or metro manila becomes completely built up, what then would happen to the operations of SM malls if they would have to subsidize the vacant hotels and unsold condominium units? In a good cycle, consolidation is perfect for the group but in bad cycles, does it really make sense?

  • http://www.facebook.com/profile.php?id=100003516764413 Jean Claude

    Ang galing talaga ng mga Chinoy sa negosyo. Native Pinoys are only good as workers for foreign countries. 

    • http://profile.yahoo.com/RDDM5UQ45HLPPKM66KYEBCMTCE dave

      Sy is already a Pinoy. Except if you tend to be racist and insists that he is chinese. Hooray to Henry Sy. Let the chinese money inflow to our country.

      • http://www.facebook.com/profile.php?id=100003516764413 Jean Claude

        I said Chinoy not chinese. Pusong Pinoy yang si Henry Sy and his life success story is something everyone should learn from.

      • http://mikkieugenio.tumblr.com/ Paul Eugenio

        If not for the war, he could not have thought of selling shoes. If he never took the risk of building a mall at the height of EDSA revolution, there wouldn’t be SM as big as it is now.

        Lesson learned: Take the right risks. Most Pinoys risk for the wrong things – try watching Face to Face to find out.

      • Hagler

        Pusong pinoy? bakit close ba kau ni Sy kaya mo nasabi na pusong pinoy?

    • http://pulse.yahoo.com/_V6JTYBZXUSXIDCD67ACZK7NUKM Joseph

      Chinoys kasi had it rough at the start and had to set themselves apart. Now the tables have turned. Further aggression between both parties isn’t going to help this country. Only cooperation will.

  • http://www.facebook.com/roy.reyes.90663 Roy Reyes

    :)

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