SM defers China listing plan

Artist’s perspective of SM City Chongqing. SM Prime Holdings Inc. is shelving for now plans to take its mall business in China public as the company’s top official said they have yet to achieve the required scale. FROM SMCITY.CN

MANILA, Philippines—SM Prime Holdings Inc., the property arm of Henry Sy’s SM Investments Corp., is shelving for now plans to take its mall business in China public as the company’s top official said they have yet to achieve the required scale.

SM Prime president Hans Sy said in an interview that an earlier goal to list by 2014 would be deferred and he indicated it could take several more years before the business was ready.

SM Prime operates five malls in China today, about half of what it expected by this time when the China listing announcement was made in 2009. The company was looking at a five-year horizon to list its China business, either in Singapore or China. It expected to have around 10 malls by that time.

“A China listing is still part of the game plan. But we are not yet there,” Sy said.

Asked about whether this could happen in the next five years, Sy said, “I want to say yes but I cannot say. When the size is there.”

Its China malls, located in Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing, have a floor area of 800,000 square meters and contributed about 10 percent of SM Prime’s rental revenues, which hit P20.9 billion in the nine months through September. Next year, the company will open SM Zibo, which will be located in Shandong province.

“In terms of size, people always look at us as big but it’s relative. For international companies, if you compare us, we are actually still a small player,” Sy said.

At the moment, Sy said the company’s main focus remained in the Philippines, where it operates 47 shopping malls, residential and leisure projects.

“There really is more potential in the Philippines now,” he noted.

The statements came as Sy said they were prepared to proceed with building residential projects in China following a recently completed merger with other property companies of the SM Group.

“With the consolidated group, we can now go to China with residential because before it was only the malls,” Sy told reporters late Tuesday.

In the Philippines, residential condominium arm SM Development Corp. builds projects near SM shopping malls as both components can draw synergies from each other. Sy said they would employ a similar strategy in China.

“We believe the Philippine formula works very well in China. It’s a bit different but it works very well,” Sy said while declining to elaborate on specific plans.

In 2010, SMDC vice chair Henry Sy Jr. said they would invest about P19.1 billion to start residential projects near existing malls in Xiamen and Jinjiang City.

Those figures, based on a different set of assumptions, are likely to change today, but Sy declined to elaborate.

SM Prime said earlier this month it was investing $3.4 billion over the next two years in line with an aggressive expansion program.