SM Investments Corp. hikes capex to P65-B

Posted at 11/09/2012 7:56 AM | Updated as of 11/09/2012 7:56 AM

MANILA, Philippines - Conglomerate SM Investments Corp. is increasing total spending next year by about 16 percent to a record P65 billion as it seeks to sustain earnings and to fuel the growth of its consumer-driven core businesses.

SM Investments Chief Financial Officer Jose Sio told reporters during the company’s third-quarter briefing on Thursday that the bulk of the spending would be done by the group’s shopping mall and real-estate development arms, followed by the retail segment.

Sio said a third of the budget could be funded by external sources such as equity or debt offerings, while two- thirds would be financed internally.

Unit SM Prime Holdings Inc., the country’s biggest mall developer, expects to spend at least P30 billion next year, with an estimated P12 billion to P13 billion to be spent on China alone, SM Prime Chief Financial Officer Jeffrey Lim said.

Lim said spending in China would be bigger next year as the company pours significant resources into SM Tianjin, which will be SM Prime’s largest shopping center when it opens in 2014.

“We will also do additional land banking in China,” Lim said.

The company plans to open next year a new SM shopping mall in Bonifacio Global City and the expansion of SM Megamall, which would make it the Philippines’s largest shopping center with a gross floor area of 550,000 square meters.

Robert Kwee, SM Retail executive vice president, said the company would continue to grow “organically” as it plans to open 20 to 30 stores annually, mainly under its Savemore supermarket format.

He said the company would end with 185 stores next year from 155 stores at the end of 2012.

SM Investments said on Thursday that net income for the nine months through September hit P16.1 billion, up 14 percent, as revenues increased 13 percent to P157.9 billion.

Banks, mainly through BDO Unibank Inc., led net income contributions at 36 percent, retail operations at 26 percent, shopping malls at 23 percent and property development at 15 percent.