Bloomberg News

SM Investments’ Profit May Double in 6-7 Years, CFO Says

October 28, 2011

(Updates with comments from CFO in the fifth paragraph.)

Oct. 28 (Bloomberg) -- SM Investments Corp., holding company of Philippine billionaire Henry Sy, expects profit to double in six to seven years as property, tourism and banking ventures benefit from remittances by overseas Filipino workers and an expanding business-process outsourcing industry.

SM Investments, owner of the nation’s biggest bank and the second-largest homebuilder, may boost its net income by between 13 percent and 15 percent annually in the next six to seven years “unless there’s a major collapse” in the world economy, Chief Financial Officer Jose Sio said in an interview yesterday.

“Growth will be coming from all our divisions but the major impetus of that will be property and banking,” Sio said. The group plans to list its China malls business either in Hong Kong or Singapore by 2015, once it has expanded sufficiently to get better value for the venture, Sio said.

The Philippines is counting on overseas Filipinos and providers of business services, including call centers to boost economic growth that slowed for the fourth straight quarter in the three months through June at 3.4 percent. Funds from 8.5 million migrant Filipinos account for 10 percent of the $200 billion economy while jobs at call centers are helping contain unemployment that’s one of the highest in Asia at 7.1 percent.

‘Well Capitalized’

“We are comfortable at least in the next three years,” Sio said. “Banks are well capitalized, overseas Filipinos continue to increase remittances and call centers continue to increase.”

SM Investments’ property business, now made up of residential projects, will see “a big push starting in 2013” driven by its gaming and tourism-related ventures, Sio said. Gaming may account for about 3.5 percent of SM Investments’ earnings in 2013 and this will grow up to 10 percent in the long term, he said.

Manila-based SM Investments owns Banco de Oro Unibank Inc., the nation’s largest lender by assets, and SM Development Corp., the No. 2 builder of residential towers by market value. Its holdings also include China Banking Corp. and SM Prime Holdings Inc., the nation’s biggest shopping mall operator, and the No. 1 supermarket and department store operators. SM Investments also has a venture with Belle Corp., which is building one of Manila’s biggest casino-hotel complexes.

SM Prime’s biggest mall will open in 2013, in Tianjin, China and this complex will become a “major” earnings contributor in 2014, Sio said. SM Prime opened its fourth mall in China last month and Sio said Oct. 14 that it plans to open two Chinese malls annually in the next three years. SM Prime has 41 shopping malls in the Philippines, according to its website.

Banco de Oro climbed 5.3 percent to 56.30 pesos at the close in Manila, the highest since Sept. 19. SM Prime increased 0.8 percent to 13 pesos, while SM Development gained 0.3 percent to 7.97 pesos. SM Investments rose 0.8 percent to 557 pesos, the highest since Sept. 19.

--Editors: Dave McCombs, Suresh Seshadri.

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net

To contact the editor responsible for this story: Reinie Booysen at rbooysen@bloomberg.net


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