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SM Prime unfazed by crisis

By Riza T. Olchondra
Philippine Daily Inquirer
First Posted 21:19:00 09/23/2009

Filed Under: Company Information

SM PRIME HOLDINGS INC., the biggest mall operator in the Philippines, seems largely resilient to the global recession as it aims for a growth of at least 8 percent in consolidated net income.

“We are really targeting a little better [than last year’s 7-percent growth]. I should say about 8 to 9 percent full year,” said Hans Sy, president of SM Prime Holdings Inc., a unit of retail tycoon Henry Sy’s SM Investments Corp.

SM Prime booked P6.4 billion in net income in 2008 as against P6 billion in 2007.

Sy’s optimism is fueled by consumers’ continued patronage of SM malls and the growing remittances from Filipino workers abroad that has encouraged SM Prime to sustain its strategy of opening about three new malls a year.

“We were not affected at all (by the crisis) in this country,” Sy said. “We are continuing our five-year program. We have been quietly acquiring some properties around the country continuously to open two to three malls [a year] in the country.”

Opportunities in China, considered the biggest growth area globally, is also seen to give SM Prime a boost. The company aims to build at least one mall in China a year starting 2010 and may later accelerate that pace to as many as three annually, depending on prospects.

“To my knowledge, the shopping center business can very well grow in China. Here in the Philippines we have more than 30 malls and China is 30 times bigger,” said Sy. SM Prime is spending P5.5 billion for its expansion in China this year.

The People’s Republic of China has a land area of about 9.6 million square kilometers—the third largest country next to Russia and Canada. China’s land mass is more than 30 times the land mass of the Philippine archipelago, whose 7,107 islands total 300,000 square kilometers.

“We are very new there and there are many places where there are no malls yet. Our priority would really be growth stories in China,” he said.

Sy said that SM Prime was sticking to its planned P12-billion capital expenditure program, which would mostly go to mall construction.

In its financial statement for the first half of 2009, SM Prime said it has booked P3.4 billion in net profit as of June, 8 percent higher than the P3.2 billion in the same period last year.

Net income from the Philippine operations alone grew 7 percent to P3.35 billion from P3.13 billion.

The net income of the three malls acquired in China surged 60 percent to P59 million in 2009 compared to P37 million in 2008.

By year’s end, the company is expected to have 36 malls in the country with an estimated total gross floor area of 4.9 million square meters.



Copyright 2010 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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