SMIC and MPIC rebound in 1H

MANILA, Philippines — Conglomerates SM Investments Corp. and Metro Pacific Investments Corp. saw earnings rebound as core businesses gain lost ground. But the arrival of the Delta variant could threaten its financial footing.

In a disclosure to the Philippine Stock Exchange, SMIC posted a consolidated net income that jumped 183% to P20.1 billion from January to June this year. Likewise, revenues crept up P193.5 billion.

“Our banking and residential businesses performed well as we also continued to invest in long term expansion with new stores, bank branches, residential project launches, and investments in malls, as well as taking a majority stake in 2GO in our equity investment portfolio,” said SM Investments President and Chief Executive Officer Frederic C. DyBuncio.

Among SMIC’s core businesses, its banking segment account for 58% of the conglomerate’s earnings while property (28%) and retail (14%) segments round out the list.

So far, fee-based earnings from SM-owned banks, BDO Unibank Inc. and China Banking Corp., fueled a stable year for this sector. From January, SMIC added 22 branches to its banking system.

Its property ventures also registered similar gains, as SM Development Corp., developer of condominiums across Metro Manila, delivered P24.5 billion in revenues for the first half. Amid the pandemic, the SM added 3,900 new residential units in Manila and Pampanga. Reservation sales, a consistent hitter for Philippine property developers, racked up P55.1 billion in the same period, marking a 30% year-on-year increase.

However, strict quarantine restrictions in Metro Manila and key urban areas nearby hurt its shopping mall segment as revenues from January, were slashed by 26% year-on-year to P10.7 billion.

Its retail segment showed similar favorable gains. Cost reductions implemented in the first quarter of 2021 stimulated a net income of P3.6 billion from P522 million.

Aside from that, SMIC earlier acquired a 52.89% controlling stake from Davao-based businessman Dennis Uy’s 2GO Group.

In MPIC’s disclosure to the local bourse, the conglomerate posted a P6 billion net income in the first half of the year, that grew 13% year-on-year. Helmed by Manny V. Pangilinan, MPIC has varied interests in power, water, tollways, public transport, and healthcare across the Philippines and Southeast Asia.

Its core businesses have been affected by sweeping pandemic restrictions, which saw some segments suffer greater losses than others as months passed.

"Despite threats of recurring stringent quarantine measures, we are confident that our Core Net Income guidance of at least P12.0 billion for full-year 2021 is still attainable. We are seeing that people are no longer letting the virus run their lives and are able to bounce back more quickly than we did during the start of the pandemic," said MPIC chair Pangilinan.

Broken down, Meralco, the country’s largest power distributor, saw net income in the first half creep up 8% to P11.4 billion as electricity volumes sold grew. For the first half, residential use grew by 3% while industrial customers, which span manufacturing plants and construction, improved by 23%. However the onset of the dry season pushed consumption up, especially in the Luzon grid. But blackouts and service interruptions in the second quarter marred its upbeat performance.

Maynilad, one of the country’s top water utility providers, booked a net income of P1.8 billion which slid 8% in the second quarter as operating and amortization costs continued to mount. Water consumption across its segments remained depressed save for industrial use, which slightly grew as businesses opened.

Metro Pacific Tollways Corp., the country’s biggest tollway builder and operator, saw net income for the first half register P1.9 billion, as it benefited from easing restrictions increasing vehicle use which fueled traffic across roads in the country.

Its light rail segment has not shown any signs of recovery, as revenues slipped 34% in the first half to P543 million due to muted commuter use as a result of ensuing physical distancing measures.

Shares of SMIC closed down 0.05% to P964 per share while MPIC shares were up 1.11% to P3.64 apiece to end midweek trading.