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Mall expansion fuels SM’s Q3 profit rise

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Photo from SM Center Lemery Facebook page (@smcenterlemery)

SM PRIME Holdings, Inc. posted a 16% rise in attributable profit in the three months to September, on the back of a double-digit growth in revenues driven by the expansion of its mall business and sales of its residential projects.

In a regulatory filing, the holding firm for country’s richest man Henry Sy, Sr.’s property investments posted a net income attributable to the parent of P5.66 billion in the July to September period, higher than the P4.86 billion in delivered in the same period a year ago. SM Prime’s revenues for the period likewise grew 16% to P21.44 billion.

The company attributed the growth to its mall expansion program, the improvement of its same-mall sales, and increased contribution from residential sales.

“SM Prime’s performance in the third quarter is a testament to the buoyant overall economy that benefits the whole property market. The timely expansion of our malls and launches of our residential projects in the provinces are positively contributing to the strong performance of our company,” SM Prime President Jeffrey C. Lim was quoted as saying.

The third quarter pushed SM Prime’s nine-month attributable profit to P20.05 billion, 15% higher year on year on the back of a 12% increase in consolidated revenues to P64.69 billion. The company also booked a 16% increase in operating income to P30.14 billion in the January to September period.

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Mall operations accounted for 60% of SM Prime’s revenues at P38.58 billion. New malls and expansions boosted rental revenues by 10% to P32.83 billion, while same-mall sales maintained its 7% growth.

The company currently has 65 shopping malls in the country with eight million square meters (sq.m.) in gross floor area. SM Prime is set to open SM Center Lemery in Batangas and SM Center Pulilan in Bulacan by December, bringing its provincial mall count to 44 from 38 in 2016.

SM Prime also has seven malls in China covering 1.3 million sq.m.

For the residential segment, the robust take-up of SM Development Corp.’s (SMDC) housing brands drove revenues 10% higher to P20.50 billion during the first three quarters of 2017. This is primarily due to the sales of ready-for-occupancy units.

Reservation sales was recorded at P42.08 billion, 18% higher year on year while units sold grew by 3% to 12,963 as compared to the 12,579 units sold a year ago.

SMDC cited Shore 2 Residences in Pasay City, Air Residences in Makati City, Fame Residences in Mandaluyong, and Grass Residences in Quezon City as among the projects with positive performances for the period.

Meanwhile, SM Prime’s other businesses, comprised of office leasing, hotel, and convention centers, grew by 39% to P5.76 billion during the nine-month period. The firm attributed this to rental revenues coming from Five E-com Center and Conrad Manila.

SM Prime’s office portfolio consists of six office buildings covering 383,000 sq.m. The completion of Three E-Com and Four E-Com Centers inside the Mall of Asia Complex by 2018 and 2020, respectively, is slated to add 320,000 sq.m. of GFA to the company’s office portfolio.

“Given all these, we remain optimistic that we are on track to meet our growth target this year,” Mr. Lim said.

Shares in SM Prime lost 35 centavos or 0.94% to P37.05 each at the Philippine Stock Exchange on Monday. — Arra B. Francia

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