SM eyes accelerated profit improvement

MANILA, Philippines - The umbrella property group of mall and banking conglomerate SM Investments Corp. (SMIC) expects an accelerated profit improvement this year, allowing it to return to its double-digit growth pace.

Performance will be driven by the strong economy, more shopping mall visitors and the integration of entertainment businesses, SM Prime Holdings Inc. President Hans T. Sy said.

“For the things we are doing, everything is correct. We are able to attract people to come to our malls and we are able to give the right service,” Sy said.

In 2013, the property arm of retail tycoon Henry Sy reported flat earnings of P16.27 billion due to one-time costs of consolidation. SM Prime’s consolidated net income would have grown eight percent to P17.55 billion without the one-time restructuring cost of P1.28 billion.

Given the completion of the consolidation of the property businesses, Sy said SM Prime is gearing for another good year.

In May, mall and banking giant SMIC announced the merger of its real estate businesses, creating the most valuable property firm in Southeast Asia. It merged upscale Tagaytay Highlands developer Highlands Prime Inc., condominium builder SM Development Corp., private firm SM Land Inc. and mall developer SM Prime.

Sy said even the launch of SM Lifestyle Entertainment Inc. last week will help the listed firm’s performance this year.

“It consolidated all our entertainment component. That’s one of the drivers (for growth),” Sy said.

Brands under SM Lifestyle include SM Cinema, IMAX, Director’s Club Cinema, Snack Time, SM Tickets, ePlus Tap To Pay, ePlus Digital, Mall of Asia Arena, SM Science Center, SM Bowling Center and SM Skating Rink.

“(SM Lifestyle) will be more focused and we believe that’s going to play a big role in the future, especially with the Internet business,” Sy said. However, bringing people to shopping malls will remain as the top objective of SM Prime, he said.

To date, SM Prime has 48 shopping centers in the country and five in China: Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing. SM City Zibo will this year.

SM Prime is spending $1.5 billion in 2014 and another $1.9 billion in 2015 to beef up its land bank, build more shopping malls and launch more office space. SM Prime allotted $1.4 billion last year, up from $800 million in 2012.