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SM Group capital spending seen to hit P65B in 2013

Mall development likely to get the bulk

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The SM Group of tycoon Henry Sy sees group-wide capital spending to reach a record-high of P65 billion next year, mainly for shopping mall and residential property development.

SM Investments Corp., which reported Thursday a 14-percent year-on-year rise in January-September net profit to P16.1 billion, remains optimistic on its five core businesses: banking, shopping malls, retailing, residential property, and hotel and convention businesses.

For next year, P30 billion of the P65-billion capital spending estimate will be accounted for by SM Prime Holdings’ investment in new malls, said SMIC chief finance officer Jose Sio. Out of this, about P18 billion will go to local shopping mall projects, added SM Prime chief finance officer Jeffrey Lim.

SM Development Corp., for its part, is projecting a capital spending of about P32 billion next year.

“We will likely be exceeding our (capex) budget of the previous year by at least 10 percent,” said SMIC investor relations officer Cora Guidote, adding that the group was on track to meeting this year’s capital spending program of P54 billion.

On SMIC’s nine-month results, banks accounted for 36.1 percent of consolidated net income, followed by retail operations, which contributed 25.8 percent. Malls and property development accounted for 23.3 percent and 14.8 percent, respectively.

“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. As we approach the last quarter of year, which has traditionally been our strongest period, we are confident of achieving our full-year target,” SM president Harley Sy said in a statement.

Group-wide revenue rose by 13 percent to P157.9 billion from the level a year ago, while earnings before interest, taxes, depreciation and amortization (Ebitda) grew by 15 percent year on year to P36.7 billion, for an Ebitda margin of 23.2 percent. Return on equity was steady at 14.2 percent.

SM Retail reported a net income of P4.1 billion in the first nine months of the year, up by 6.7 percent year on year, while sales rose by 8.7 percent to P110.8 billion.

Ebitda amounted to P7.6 billion, up 13.5 percent year on year, for an Ebitda margin of 6.9 percent. Net margin for the period stood at 3.7 percent.

The country’s largest retail group now has 193 stores, consisting of 46 department stores, 37 SM Supermarkets, 34 SM Hypermarkets and 76 SaveMore stores.

Robert Kwee, SM Retail executive vice president, said the food retail group would likely end the year with 155 stores, which would further increase to 185 next year.


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