SMIC boosts capex budget to P80 B

MANILA, Philippines - Mall and banking conglomerate SM Investments Corp. (SMIC) has substantially jacked up its capital expenditure budget this year to P80 billion to support the continuous growth of its operating units.

A P20-billion retail bond offering and a $300-million syndicated loan will partly finance the record capital spending, company executives said.

“On the holding company level, (capital expenditures) is about P80 billion: P70 billion is SM Prime Holdings Inc., retail is P5-6 billion and the rest is the banks,” Corazon Guidote, senior vice-president for investor relations of SMIC, said during a wealth building summit organized by online brokerage firm COL Financial Group Inc.

SMIC allotted P65 billion for capital spending last year and P56 billion in 2012 to support an annual profit growth of 12-15 percent under its 2013-2015 plan.

The group is raising P15 billion through a bond offering. Last month, its board of directors approved the issuance of P10 billion worth of fixed-rate peso retail bonds, with an oversubscription option of up to P5 billion to cater to high demand.

For the consolidated property group, SM Prime chief financial officer Jeffrey Lim said the company is completing its growth road map that will be presented to stockholders in April.

SM Prime, which holds the residential development and mall operations business, will also conduct several fundraising programs this year.

“The plan to tap the capital market is shelved for now given the price of SM Prime so we will work on other alternative funding options especially on the debt side,” Lim said.

Specifically, the property firm aims to raise P20 billion from the offering of seven- and 10-year retail bonds in the second quarter or second half, he said.

Aside from the local fundraising, Lim said SM Prime is also looking into a $300-million syndicated loan for the malls expansion in China.

SM Prime will put up a shopping mall in an eight-hectare property in the eastern coastal province of Jiangsu in China.

“We have five malls in China and we have two under construction,” Lim said.

SM Prime so far has 47 shopping centers in the Philippines and five in China: Xiamen, Jinjiang, Chengdu, Suzhou and Chongqing. SM City Zibo will open this year.

SMIC’s profits climbed 11 percent to P27.45 billion in 2013 from P24.67 billion a year ago. Revenues jumped 13 percent to P253.5 billion from P223.9 billion in 2012.