Thursday, March 1, 2018

SM Prime may spend higher capex this year

SM Prime Holdings Inc. (SMPH),  the shopping mall operator led by the Sy family, is increasing its capital expenditures (capex) this year to about P75 billion, mainly to buy its properties to expand its business all over the country.

Jeffrey C. Lim, the company’s president, said SMPH last year spent close to P65 billion. He added this year’s capex will be higher as the company expands its land bank.

Lim told reporters on Wednesday the company will open seven new malls and roll out from 12,000 units up to 15,000 units of residential units.

He added that the company will list its issued P20 billion bonds at the Philippine Dealing and Exchange Corp. within the week. However, the remaining P20 billion that it already registered with the Securities and Exchange Commission may be issued by next year.

“We have no plans this year,” Lim said. “We can do it maybe next year.”

The new malls are mostly out of Metro Manila, while we will build one mall in China by the end of the year, he added.

Other than in China, the company has no other investments overseas, Lim said.

Nonetheless, SM Prime is now looking at other territories, he added.

“Vietnam is one, probably mall and residential, but it is still in exploratory stage,” Lim said. I think that’s the better option for us.”

He explained the company sees the Vietnam market as “okay.”

“It’s more of the business opportunities and prospects. We are not looking at short term; it’s always long term,” Lim said. “So its beyond the five-year horizon; so we have to look for opportunities now. But its not something that we’ll also just go into, we have to properly evaluate and validate.”

SMPH said it had a recurring net income growth of 16 percent in 2017 to P27.57 billion, from P23.8 billion in the prior year, as it expanded the reach of its main business: shopping malls. Consolidated revenues grew 14 percent to P90.9 billion in 2017, from P79.8 billion in 2016.

Overall operating income improved by 15 percent to P40.6 billion in 2017, from P35.3 billion the previous year. Mall revenues grew by 9 percent to P53.2 billion last year, from P48.6 billion in 2016, according to documents provided by the company.

Rent income improved by 11 percent to P45.3 billion from P41 billion in the previous year, due to rising contribution of rentals from new and expanded malls that were launched in 2016 and 2017. These were malls in San Jose Del Monte in Bulacan, Trece Martires in Cavite, East Ortigas in Cainta, CDO Downtown Premier in Cagayan de Oro, S-Maison at Conrad Manila, Puerto Princesa and Tuguegarao Downtown.

SM Prime has 67 malls in the Philippines offering 8 million square meters of gross floor area and seven malls in China with 1.3 million square meters of gross floor area at 2017 year-end.

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