SM Investments posts 14% jump in 9-month net income

MANILA, Philippines—SM Investments Corp. on Thursday reported a 14-percent increase in nine-month net profit through September to P18.5 billion, led by contributions from banking and shopping malls, which are segments where the Henry Sy-led holding firm dominates.

Revenues during the period rose 15 percent to P183.1 billion. The company said earnings per share stood at P23.44, up 12 percent from last year.

Growth is expected to continue through 2014 as new businesses like its casino venture, through unit Belle Corp., which partnered with Macau’s Melco Crown Entertainment, is set to start by the middle of 2014, SM chief financial officer Jose Sio told reporters.

Sio said capital spending was expected to be higher for 2014. He said SM was expanding its China presence, so far through shopping malls, while gaining from Philippine economic growth.

“We look at the outlook for the Philippines, whatever that is, the business plan will follow,” Sio said. He added that the company was looking to tap the capital markets as part of an ongoing fundraising plan and said the sale of additional shares was among the considerations.

SM Investments last year said it was spending about P65 billion for 2013 mainly for expansion purposes.

Of the company’s consolidated net income, banking, mainly through BDO Unibank Inc. and China Banking Corp., accounted for the largest share with a contribution of 48.6 percent.

Retail, which operates the company’s supermarkets, contributed 18.8 percent, while the property group contributed 32.7 percent, of which 20.4 percent came from mall operations and 12.3 percent from property development, mainly residential.

“With these nine-month results, we are on course to meeting our full-year target. We are confident of ending the year on a high note, with our retail and mall businesses benefiting from increased consumer spending during the Christmas season,” SM Investments president Harley Sy said in a statement. “We remain highly positive on the country’s economic fundamentals and will push ahead with plans to expand our core businesses, especially now that we have obtained the SEC’s approval for us to merge our property businesses under SM Prime Holdings Inc.”

Sy was referring to the merger between shopping mall arm SM Prime Holdings and residential condominium developer SM Development Corp. and privately held SM Land. The deal, where SM Prime is the surviving entity, created the region’s biggest property developer at the time with a market value of about $14 billion.

“The consolidation is expected to result in significant synergies and accelerated growth in the medium term as the enlarged SM Prime embarks on larger scale, mixed-use developments with its various business units working in concert,” SM Investments said in the same statement.

The company separately confirmed an Inquirer report that it signed an agreement to buy five office buildings in Bonifacio Global City in Taguig, controlled by Apollo Global Real Estate. Sio declined to comment on the value of the deal, saying this has yet to be finalized. The buildings have a combined 148,000 square meters in leasable area.