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SM Investments: Delivering Value at All Times

SM Investments Corporation, one of the leading conglomerates in the Philippines, is taking advantage of the country's strong growth through its focused approach in its three core businesses, retail, property and banking. With the Philippine economy's robust growth projected at 6% to 7% per year, SM continues to see massive opportunities ahead and building its capabilities further by capitalizing on its market leading assets.

In the first half of 2016, SM posted consolidated net income growth of 11% to PHP15.0 billion while consolidated revenues rose 8.5% to PHP151.1 billion. SM's proven track record over the past 10 years delivered a compounded annual growth rate in value of 18% per annum to its shareholders, significantly outperforming the average returns for listed companies on the Philippine Stock Exchange.

SM's solid financial performance reflects the company's prudence and value orientation by actively managing cost efficiencies and margin improvements and employing competitive strategies for sustained growth across its businesses. Likewise, the robust financial result is primarily attributable to the country's burgeoning middle class and the increasing demand for retail, property and banking services.

Tapping PH's huge potential

SM aims to continue tapping on the huge potential of the Philippines by pursuing new growth opportunities and sustained delivery from its entire portfolio. It is expanding its successful business by injecting PHP70 to PHP80 billion (USD 1.5 billion to USD 1.7 billion) worth of capital expenditures every year. While it continues to grow in Metro Manila, SM is aggressively expanding into underserved provincial areas as part of its medium term strategy for all its core businesses. SM's aggressive expansion will cost an average of US1.5 billion to US$ 2.0 billion.

Its retail operations, consisting of THE SM STORE and SM Markets, it's wide network of food retail stores, enjoys a strong brand presence with its wide assortment of quality products, reliable service and convenience to customers. It is increasing its domestic footprint by building its food stores at a rate of 40 to 50 stores per year, excluding its minimarts which are growing at a rate of 8 to 10 stores per month. Earlier, SM announced the merger of Sy family owned specialty stores comprising of over 1,400 outlets under SM Retail, Inc. The merger further drives the strong competitive position of SM's non-food retail business through diversification and increased synergies with SM malls as it is expected to create greater value and boost retail earnings.

Its property arm, publicly-listed SM Prime Holdings, Inc., has become one of the largest integrated conglomerates in the Philippines with its interests in the development of malls, residences, office buildings, resorts, hotels and convention centers across the country. It continues to embark on aggressive land banking activities to expand the group's portfolio and to take advantage of high-value propositions early on in the property cycle. SM Prime is building 5 to 6 malls per year while its residential business aims to launch 12,000 to 15,000 units per year. In June 2016, SM launched its 347-room Conrad Manila, located atop S' Maison, an upscale retail podium at the Mall of Asia (MOA) Complex. This is the 6th hotel in its portfolio as the group begins to tap on the tourism potential of the country. SM Prime will. grow its business by finding opportunities in underdeveloped second and third-tier cities in the Philippines by offering an aspirational and integrated lifestyle proposition, similar to its MOA Complex, which showcases a well master-planned business, entertainment and residential hub fronting the picturesque Manila Bay.. In China, SM Prime has likewise developed six malls in second-tier and third tier cities and is set to open the first phase of its mall in Tianjin by end of2016.

In banking, BDO Unibank, Inc. is the country's biggest bank in terms of total loans and deposits and is the market leader in terms of investment banking, asset management, private banking and leasing. BDO has set its sights on corporate lending but with increasing interests in consumer-led and micro-lending activities through One Network Bank. Another SM bank subsidiary, China Banking Corporation, is focused on providing service to the needs of small and medium-scale enterprises.

Beyond its focus in providing world-class service to millions of customers and constantly seeking new growth opportunities across its businesses, SM is committed to long-term sustainability through its integrated social, environmental and governance programs. It aims to continue making a difference in the lives of millions by being a catalyst for inclusive growth through its operations that allow small and medium-scale companies to thrive and through its .corporate social responsibility initiatives that provide free education, health services and livelihood programs. Its environmental sustainability programs are far reaching involving creating awareness, conservation and preservation as well as disaster resilience in order to promote business continuity not just for its businesses but for all its stakeholders. Its steadfast commitment to sustainability, adherence to core values and delivery of steady returns and asset growth are among the key drivers in pushing the company forward and creating value at all times for its shareholders.

 

Date: 
Tuesday, October 25, 2016
Source: 
Wall Street Journal