SM Investments, undaunted by the effects of financial troubles in Europe and the United States, yesterday announced that it will budget P56.8 billion in capital expenditures for its big basket of business ventures.
Harley T. Sy, president of the holding company and the youngest among Henry Sy’s siblings, said the group would go for what he calls "managed growth."
Sy was implying that SM Investments is betting big on the resiliency of Filipino consumption, fired up by unhampered remittances of overseas Filipino workers, as the company deploys its biggest capital expenditures yet.
SM Investments’ planned capex is to be spent on the company’s retail business (P4.6 billion), bank operations (P3.4 billion), property (P26.9 billion), hotel and other tourism-related business (P1 billion), and mall operation (P20.9 billion).
The company eyes 13 to 14 percent of bottom-line growth for the whole group.
Next year’s capital expenditure exceeds by nearly a third of this year’s P43 billion capex.
Jose T. Sio, chief finance officer of SM Investments, said the group has spent nearly P33 billion of the amount.
Funding for the capex will mostly be generated internally with borrowings to be tapped on an opportunistic basis.
"We’ve always been projecting managed growth," Sy said at the sidelines of the company’s third quarter results briefing yesterday.
Sy said given the concerns on the problems in the US and Europe, things are expected to be "challenging" in the months to come.
"(But) consumers will still be there. There are still 8 million Filipinos overseas, and maybe even more. I don’t think they will be coming back soon (so) they will continue to send money," said Sy.
Based on the government’s report, private spending accounts for 60 to 70 percent of the total economic output of the Philippines, making it a linchpin of the economy.
SM Investments said that profit for the first nine months of the year reached P14.17 billion, higher than last year’s P12.48 billion.
Consolidated revenues reached P140.10 billion, 13 percent higher than last year’s P124.34 billion.
"The sustained robust performance of the company’s core businesses was a key driver of SM Investments’ positive results for the period. The company’s balance sheet remains strong with consolidated net debt to equity ratio at 32 to 68," the company said in a statement.
"SM realized its revenue and income growth objectives due to the consistent achievements attained by its subsidiaries. Our strategy is to focus on our core businesses where we have the necessary expertise to continually expand and deliver value for all our stakeholders. We intend to maintain this approach in the last quarter of 2011, which is traditionally our strongest period," added Sy.
Among SM Investments’ core businesses, banks bannered by Banco de Oro Unibank Inc. and Chinabanking Corp., contributed the most to the company’s consolidated net income at 31.3 percent; followed by retail and shopping malls which contributed 28.1 percent and 23 percent, respectively, whose vehicles are the various SM malls, and supermarkets in the country; and the real property business under residential development unit SM Development Corp., and other property-related business folded under SM Land Inc. accounting for 17.6 percent.
In the retail business, SM Retail has opened 24 new stores so far this year, bringing its total number of stores to 163. To date, it has 41 department stores, 32 supermarkets, 58 SaveMore branches, 28 hypermarkets and four Makro outlets. The group intends to open more stores until the end of this year.
In the mall operation, SM eyes to open four new malls by next year and will expand two.
SM Development, meanwhile, has residential projects with two more new residential condominium projects to be launched for the rest of the year. SM Development is targeting to launch at least five more new projects next year.
SM Investments is set to complete its 16,000-seating capacity SM Arena by the second quarter of next year.
The company is also looking to open the 200-room Park Inn hotel by Radisson in Davao City by 2014.
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SM keeps faith on spending resiliency
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