SM sees P200-billion capex in next 5 years

MANILA, Philippines - Brimming with exciting prospects, SM Investments Corp. (SMIC) expects its capital expenditures to reach around P200 billion in the next five years as it steps up the expansion of its five core businesses to further solidify operations.

During SMIC’s fifth listing anniversary yesterday, Teresita T. Sy, vice-chairman of SMIC, said the group is accelerating investments over the near-to-mid term to take advantage of promising growth opportunities and further enhance shareholder value.

“Moving forward, our plans are just as aggressive. In fact, based on our last planning session, our five-year capex could reach about P200 billion. Hence, as in the last five years, the next five may pass rather quickly but full of exciting prospects for SMIC and all of our shareholders,” Sy said.

SMIC chief finance officer Jose T. Sio, for his part, said the group should take the lead in developing tourism in the country for future growth.

To expand its footprint in the country, SMIC is building hotels to add to its growing investment portfolio which includes banking, real estate development, retail, and mall operations. 

Sio said SMIC might tap the debt or equity market should the need arise.

He said SM Development Corp, the property arm of SMIC, will issue by the end of this month up to P10 billion worth of corporate notes in maturities of three, five and seven years.

“They’re determined to do it after the elections. The proceeds of which will be used to fund SMDC’s landbanking activities,” Sio said, adding that initial demand for the notes already reached P14.5 billion since the soft launch of the offering two weeks ago. The notes were offered to selected institutional investors last week with BDO Capital &Investment Corp. as the lead arranger.

Aside from this, SM Prime Holdings Corp. is now getting ready for its planned listing of up to $600 million worth of real estate investment trusts (REITs).

Of the estimated P200 billion capex, P40.6 billion will be spent this year, the bulk of which would go to the development of residential condominium buildings and new malls. The 2010 capex, which is 27 percent higher than the amount spent in 2008, includes the expansion in China.

Of the P40.6 billion, P15 billion will be channeled to property development, P12.1 billion for the construction of four new malls here and one in China, P6.2 billion for 25 retail stores, P4.9 billion for hotels and convention centers, and P2 billion for its banks.

The group has cash of P14 billion to P15 billion which it could use to fund its capex.

From only P170 billion in 2005, SMIC’s total assets have more than doubled to P342 billion for an average growth of 25 percent per annum, Sy pointed out.

Sy said SMIC’s net earnings also improved significantly over the past five years. From P7 billion in 2005, net profit more than doubled to P16 billion for an average growth of 31 percent annually.

“Our balance sheet remains very sound, reflecting SMIC’s very conservative approach in funding our expansion program and managing our resources,” she said.