SM Investments sees over P15-billion income this year

MANILA, Philippines -SM Investments Corp. (SMIC), the listed holding firm of retail tycoon Henry Sy, expects to end the year with a net income of over P15 billion on the back of a double-digit growth in retail and real estate sales.

Last year, SMIC posted net earnings of P14 billion, up 15.6 percent from 2007.

SMIC chief finance officer Jose T. Sio said revenues are also seen to grow to P160 billion by yearend or an increase of 14 percent from P140 billion registered a year earlier. Major revenue contributors were retail and real estate operations, he said.

From only less than five percent in 2008, real estate has contributed 12 percent to SMIC’s bottom line so far this year, Sio said.

He said while fourth quarter figures have not been firmed up yet, initial results indicate that revenues have grown but not as strong as the same period last year due to a difficult business environment and the calamities that struck the country. 

“There’s an improvement but not as much as we did last year,” Sio said, adding that same-store sales grew only six percent compared to seven percent last year.

SMIC earlier announced it has set a five-year capital expenditure budget of P211.32 billion beginning this year to take advantage of a global economic recovery as well as emerging business opportunities. Of the total, P40.6 billion will be spent next year or 31 percent higher than the P31 billion allotted in 2009. 

Bulk of the 2010 capex will be sourced from internally-generated funds while the balance will come from external sources which could either be through debt or equity. As of end-September this year, the company had cash resources of $1 billion.

Majority of next year’s capital budget will go to the development of 14 residential projects while P12.1 billion has been allotted for the opening of five new malls locally and one in China.

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 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 malls — Xiamen, Jinjiang and Chengdu.

The group, through 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 gross floor area 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 Radisson Hotel 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.