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SM Investments First Quarter Net Income Up 22% to PHP7.4 billion

 
FINANCIAL HIGHLIGHTS

   

1Q2013

1Q2012

 

Change

Php bn

Php bn

Revenue

+14.6%

56.84

49.60

Profit attributable to shareholders of the parent

+22.2%

7.38

 6.04

Basic earnings per share (pesos)

+20.2%

11.84

  9.85

       
   

2012

2011

Dividends per share

+15.6%

 10.40

9.00




 

 

 

 

 

 

 

 

 

 

25 April 2013. Pasay City, Philippines) SM Investments Corporation (SM) reported that net income for the first quarter of 2013 amounted to Php7.4 billion, up 22% year-on-year. The growth in earnings was driven by the surge in earnings of SM’s banking business, coupled with strong earnings growth from SM’s mall and property businesses. Revenues increased 15% to Php56.8 billion from Php49.6 billion in the previous year. EBITDA rose 36% to Php16.9 billion, for an EBITDA margin of 29.7%.  Return on equity stood at 13.6%.

SM President Harley T. Sy said, “We are encouraged by our first quarter results. With the continuing rise in remittances from overseas Filipinos, the expansion of the country’s BPO sector, and the recent credit upgrade of the Philippines to investment grade, we are confident of achieving even better results in the second quarter and beyond. ”

 
Net Income Profile

 

 

Banks accounted for the largest share of SM’s consolidated net income, contributing 59.7% of the total. Mall development contributed 15.8%, followed by retail and property with 14.1% and 10.4%, respectively.

 
 
Retail Operations

For the first three months of 2013, SM Retail reported a net income of Php1.2 billion, up 4.0% year-on-year for a net margin of 3.4%. Sales rose 5.8% to Php36.4  billion, while EBIT rose 5.5% to Php1.9 billion.

At the end of the quarter, SM Retail had a total of 201 stores, consisting of 46 SM Department stores, 37 SM Supermarkets, 37 SM Hypermarkets and 81 SaveMore stores. This compares with a year-ago store total 176, composed of 42 SM Department Stores, 33 SM Supermarkets, 32 SM Hypermarkets, and 69 SaveMore stores.

 
Mall Operations

SM Prime Holdings, Inc. (SM Prime) posted a 15% increase in consolidated net income for the first three months of 2013, amounting to Php2.8 billion from Php2.4 billion in the same period last year. Revenues, on the other hand, reached Php7.8 billion from Php7.0 billion, for an 11% year-on-year increase.

Rental revenues, which accounted for 86% of total revenues, rose 12% to Php6.7 billion, while EBITDA rose 12% to Php5.3 billion, for an EBITDA margin of 68%. This is largely due to rentals from new SM Supermalls opened in 2011 and 2012, namely SM City Masinag, SM City Olongapo, SM City  Consolacion, SM City San Fernando, SM City General Santos and SM Lanang Premier, with a total gross floor area of 527,000 square meters. Excluding the new malls and expansions, same-store rental growth is at 7%.

SM Prime’s five malls in China contributed Php0.7 billion in revenues for the first three months of the year, or 9% of total consolidated revenues of SM Prime. In terms of rental revenues, the China operations contributed 10% to SM Prime’s consolidated rental revenues. Gross revenues of the five malls in China increased 11% in 2013 compared to 2012 largely due to improved mall productivity and lease renewals for the first three malls opened, namely SM Xiamen, SM Jinjiang and SM Chengdu. The average occupancy rate for these first three malls is now at 96%.

SM Prime has forty six Supermalls strategically located in the Philippines with a total gross floor area of 5.6 million square meters (sqm). In China, SM Prime has five Supermalls located in the cities of Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing in China with a total gross floor area of 0.8 million sqm.

Over the next three years, SM Prime will spend approximately Php88 billion to drive its aggressive expansion plans in the Philippines and China. For 2013, SM Prime plans to open two new malls in the Philippines, SM Aura Premier in Taguig and SM City BF in Paranaque. The company is also set to expand SM Megamall this year, with the opening of the 101,000 sqm. Building D.

By the end of this year, SM Prime will have 48 malls in the Philippines and five in China with an estimated combined GFA of 6.9 million sqm.

 
Banking

For the first quarter of 2013, BDO Unibank, Inc. (BDO) announced a net income of Php10 billion, 257% higher than the Php2.8 billion posted in the first quarter of 2012. Gross customer loans continued to expand by 16% year-on-year, while total deposits increased 9%, leading to a 14% increase in net interest income to P9.6 billion.

Non-interest income also increased 130%, driven by fee-based service income and exceptional trading gains due to continuing favorable market conditions. The Bank accelerated provisioning even as asset quality improved, with gross NPL ratio and NPL coverage ratio at 2.5% and 140% respectively.

For the full year 2013, the bank disclosed an income guidance of Php20.4 billion. With the Philippine economy expected to sustain its growth momentum particularly with the recent upgrade to an investment-grade rating, BDO looks forward to tapping promising growth opportunities in its various customer segments, capitalizing on its established business franchise and wide distribution network.

 
Property Development

For the first three months of the year, SM’s property group registered combined revenues of Php8.4 billion. The group’s net income came in at Php1.8 billion, up 19% year-on-year, with a net margin of 21% from 18% in 2012.  SM Development Corporation (SMDC), the group’s residential development arm, accounted for 76% of the group’s net income and 71% of its revenues. 

SM Development Corporation (SMDC) reported that for the first quarter of 2013, consolidated net income amounted to Php1.4 billion, up 12.0% year-on-year due to an improved gross profit margin and increased economies of scale. Net margin improved to 23% from 22% during the same period last year.

EBITDA stood at Php1.7 billion, for an EBITDA margin of 28%.   Return on equity stood at 13.2% from 13.0% last year. Meanwhile, revenues from real estate sales increased 4% to Php5.9 billion.

SMDC’s asset base expanded 47% year-on-year to Php85.2 billion. SMDC’s net debt to equity ratio remains conservative at a ratio of 30% net debt to 70% equity.

During the year, the company will launch three to four new projects: These are Trees Residences and Grass Residences Phase 2 in Quezon City; Shore Residences at the Mall of Asia Complex; and possibly Rich Residences in Mandaluyong.  In addition, expansion towers at Wind Residences, Field Residences, and Grace Residences will also be launched. These new and expansion projects will add about 13,300 units of new inventory.

SMDC currently has fifteen ongoing residential condominium projects all over Metro Manila, with the exception of Wind Residences in Tagaytay.

 
SM Balance Sheet

The total assets of SM Investments increased 24% year-on-year to Php570.0 billion. In 2012, SM raised about US$1.26 billion worth of new funds, through the issuance of US$750.0 million in straight bonds, Php15.0 billion in peso-denominated retail bonds, and US$150.0 million through an equity top-up placement. As of end-March 2013, SM maintained a conservative balance sheet, with a gearing ratio of 33% net debt to 67% equity.

-- End --
 

For further information, please contact:

 

Ms. Corazon P. Guidote
Senior Vice President for Investor Relations
SM Investments Corporation
E-mail: cora.guidote@sminvestments.com
Tel. No. 857-0117

 

Date: 
Thursday, April 25, 2013
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