SM Group ramps up capex to P90 B

SM Prime takes bulk of budget this year

MANILA, Philippines – The SM Group is setting aside up to P90 billion for capital expenditures this year, higher than the P80 billion spent in 2015.

SM Investments Corp. (SMIC) chief financial officer Jose Sio said the bulk of the capital budget would go to the group’s property development business under SM Prime, which includes malls, condominiums, hotels and resorts.

Funding will come from internally generated cash and external sources.

“Normally, we fund two-thirds of that internal and one-third from external sources. It could be loan or equity, depending on market conditions. The loan could be via bank or bonds. All these options are available to us,” he said.

Sio said it might be best to tap borrowings given the prevailing uncertainties on the global front.

“Our balance sheet is very strong, very liquid, we have a very low gearing ratio. There are uncertainties, elections in the US and the Philippines, and then you have all the problems in the Middle East and in China. The way to handle that is for us to stay healthy, have a strong balance sheet and less borrowing. This is the hallmark of the SM Group,” Sio said.

SMIC maintains a healthy balance sheet with a conservative gearing ratio of 36 percent net debt to 64 percent equity.

The conglomerate posted a consolidated net income of P28.4 billion in 2015 or the same level as the previous year.  Revenues rose seven percent to P295.9 billion.

As of the end of 2015, SMIC’s total assets reached P771.1 billion, up eight percent year on year.

SM Prime currently has a total of 56 malls across the country with a total retail space of 7.3 million square meters.  

In China, SM Prime has six shopping malls with a gross floor area of 0.9 million sqm including the recently opened SM City Zibo. 

Including its China malls. SM Prime’s total retail space covers 8.3 million sqm.

At present, SM Prime has 27 residential projects, 25 of which are in Metro Manila and two in Tagaytay.