SMIC sets massive P211-billion capex over 5 years

MANILA, Philippines - SM Investments Corp. (SMIC), the investment holding firm of the Sy family, has set a massive capital expenditure program worth P211.32 billion over five years to take advantage of a global economic recovery as well as emerging business opportunities.

On the sidelines of the company’s annual shareholders’ meeting yesterday, SMIC chief finance officer Jose T. Sio said for next year alone, the company has earmarked P40.6 billion for its capex or 31 percent higher than the P31-billion budget in 2009. 

Sio said 70 percent of the 2010 capex will come from internally-generated funds while the balance will come from external sources which could either be through debt or equity.

He said the company is in very good shape to support its capex, pointing out that it has cash resources of $1 billion as of end-September this year.

SMIC reported a 14-percent rise in its net profit for the nine months ending September this year to P10.8 billion, with retail and property continuing to be the group’s major drivers of growth. Consolidated revenues likewise went up 14 percent to P110.9 billion while EBITDA amounted to P23.5 billion.

Harley Sy, SMIC president, said: “SMIC’s nine results in 2009 affirm our growth track over the medium term as it is achieved amidst a challenging global business climate. SMIC is poised to enter a new growth cycle led by our retail and property businesses. SMIC’s core businesses, namely malls, retail, banking and property, mirror the strengths of the Philippine economy amidst the global financial crisis.”

Sio said the company is eyeing a net profit of P15.5 billion this year on sales of P150 billion. The group expects to double this figure by 2014.

Sio said bulk of the programmed capital budget for 2010, or P17.4 billion, will go to the development of 14 residential projects while P12.1 billion has been allotted for the opening of five new local malls and a China mall. Among the sites identified for mall construction next year are Calamba, Laguna; Masinag, Antipolo; Tarlac; Novaliches; and San Pablo, Laguna which are expected to provide 279,228 square meters in total gross floor area.

Three new malls in China - Chonggqing, Suzhou, and Zibo – are targeted for opening between 2010 and 2012. These will add to SM’s three existing mall – in Xiamen, Jinjiang and Chengdu.

The group, through unit SM Prime Holdings Inc., expects a total of 41 malls nationwide by end-2010 with total gross floor area of 4.8 million square meters or 6.2 percent higher than the estimated 2009 GFA of 4.5 million square meters. Its malls currently have a foot traffic of over 2.5 million per day.

Around P6.2 billion has been set aside for the development of 25 new supermarkets and hypermarts while the balance of P4.9 billion will be channeled to the development of hotels within the Mall of Asia complex along Roxas Boulevard, its first boutique hotel in Bacolod, and the 400-room Radissons Cebu.

The 150-room boutique hotel is scheduled for construction in the first quarter next year with the target date for completion set for early 2011. Estimated to cost around P2 billion, the hotel will rise on a 400-square meter lot and will have a gross floor area of 11,500 square meters.

The 20-story Radisson Hotel Cebu, which has a total floor area of 59,750 square meters, is the first Radisson Hotel to operate in the Philippines. The Radisson Hotel within SM Mall of Asia Complex is scheduled to open in 2011.