SM Prime investing P88B in PH, China; Q1 net profit up 15%

MANILA, Philippines–The country’s leading shopping mall developer SM Prime Holdings Inc. expects to invest P88 billion in the next three years to expand its shopping mall portfolio in the Philippines and China.

 
SM Prime also announced on Tuesday a 15-percent year-on-year growth in first quarter net profit to P2.79 billion as revenues were boosted by same-store rental revenue expansion alongside the opening of new malls.

 
“Owing to the consumer-centric business model which we have developed over the years, and our presence in most of the country’s growth centers, we were a natural beneficiary of the country’s strong economy,” SM Prime president Hans Sy told stockholders in a meeting.

 
Over the next three years, SM Prime chief finance officer Jeffrey Lim said gross floor area (GFA) in the Philippines and China would likely grow by 7-10 percent each year through 2015 as the group invests P88 billion for expansion. Capital spending this year was estimated at P35 billion while for 2014 and 2015, outlays are estimated at P26 billion and P27 billion, respectively.

 
Half of the expansion requirements will be funded with internally generated funds and half by external borrowings, Lim said.

 
For this year, SM Prime will end with about 6.1 million square meters in GFA for the Philippines alone with 48 malls.  This year’s expansion includes the opening of 235,000-sqm SM Aura Premier this second quarter, the 114,000-sqm SM City BF Parañaque and the 101,000-sqm expansion of SM Megamall Building D.

 
At present, SM Prime owns and operates 46 stores in the Philippines and five in China.

 
SM Prime’s revenues rose by 11 percent in the first quarter to P7.83 billion. Rental revenues, accounting for 86 percent of total revenues, grew by 12 percent amounting to P6.73 billion year-on-year.

Cash flow based on earnings before interest, taxes, depreciation and amortization (EBITDA) for the period rose 12 percent to P5.34 billion, for an EBITDA margin of 68 percent. This is largely due to rentals from new SM Supermalls opened in 2011 and 2012, namely SM City Masinag, SM City Olongapo, SM City Consolacion, SM City San Fernando, SM City General Santos and SM Lanang Premier, with  a total gross floor area of 527,000 square meters. Excluding the new malls and expansions, same-store rental growth was at 7 percent.
“SM Prime’s performance for the first three months of the year sets an optimistic tone for 2013. We expect to sustain this growth trend for the next quarter as consumer spen

ding gets a boost from election spending. Moreover, we will push through with our expansion plans given the positive economic outlook.”

 
Operating expenses during the first three months increased by 11 percent to P3.6 billion mainly due to new malls launched in 2012.