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Property, retail drive SMIC profit higher

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By Arra B. Francia, Reporter

SM Investments Corp. (SMIC) reported a nine percent increase in earnings during the first six months of 2018, boosted by the double digit growth of its property and retail units amid flattish results from the banking business.

In a statement issued Thursday, the Sy-led conglomerate said net income climbed to P18.1 billion in the first half, higher than the P16.6 billion it posted in the same period a year ago. This driven by a 12% uptick in revenues to P204.9 billion, against P183.2 billion in the first half of 2017.

“We are encouraged by the results of the first half, driven by the strong performance of retail and property, particularly the residential business. Our results show the strength of the economy and consumer sentiment but we remain vigilant about inflationary pressures. We are optimistic that consumption will remain resilient,” SM President Frederic DyBuncio said in a statement.

SM’s property business accounted for bulk of its consolidated profit at 45%, followed by banks at 33% and retail at 22%.

SM Prime Holdings, Inc. (SMPH) generated P16.6 billion in consolidated net income during the first semester, higher by 16% year-on-year. Revenues also accelerated by 15% to P49.8 billion.

The property giant benefited from higher mall revenues and same-store growth. Rentals, cinema and event ticket sales and amusement revenues, contributed P28.7 billion to total revenues, 12% higher from the same period a year ago.

The residential arm of SMPH expanded its revenues to 23% to P17.1 billion for the period, as it saw strong sales from the projects it launched from 2015 to 2017. Reservation sales went up by a fourth to P34.5 billion.

Both of SM’s banking units, BDO Unibank, Inc. and China Banking Corp. reported flat growth during the six-month period.

BDO’s net income stood at P13.1 billion, 1.5% lower year-on-year due to the lower non-interest gains and bigger operating costs. The listed lender noted that without the impact of the implementation of Philippine Financial Reporting Standards on the investment portfolio of BDO Life as well as the expansion of One Network Bank, its net income would have picked up by 13%.

China Bank’s net income was unchanged at P3.6 billion as of end-June, amid a 15% increase in recurring income to P13.3 billion due to the growth of its core businesses.

Meanwhile, SM’s retail unit saw its net income grow by 10% to P5.7 billion, on the back of a 10% increase in total sales to P145 billion.

The company operated a total of 2,149 stores at the end of the six-month period, consisting of 61 The SM Stores, 1,304 specialty stores, 55 SM Supermarkets, 49 SM Hypermarkets, 190 Savemore stores, 49 WalterMart stores, and 441 Alfamart stores. The specialty stores alone generated P37.3 billion in the first half, 17% higher year-on-year, fueled by the expansion of new formats such as Miniso.

Sought for comment, Timson Securities, Inc. Trader Jervin S. De Celis said the company is on track in terms of income growth.

“By the end of 2018, SM’s year-on-year earnings growth is estimated to reach 15.60% higher than last year’s annual growth rate… This year, estimates on the full year net income for SM is at P38 billion and I think the ‘ber’ months will help the company reach this,” Mr. De Celis said in a mobile message, referring to the upcoming holiday season.

Philstocks Financial, Inc. Research Associated Piper Chaucer Tan meanwhile said SMIC’s results were below expectations of a double-digit growth.

“Given the scope of SM and exposure to various industries, the prevalent culprit would be inflation, which affects consumer spending and cost on the part of SM. But we believe that the second half can regain or bounce back as ‘ber’ months are approaching and given that during those months consumer spending increases,” Mr. Tan said in a separate message.

Shares in SM dropped 0.41% or P4 to close at P960 each at the stock exchange on Thursday.