SM outperforms PH economy


WHILE it outperformed the Philippine economy in terms of growth and now owns the largest listed companies in the Philippines, the SM Group remains small compared to its Asian counterparts, so the conglomerate is banking on innovation and providing quality domestic jobs, among other things, to further its growth in the years ahead. “There’s still a lot of opportunities for us to grow,” says Corazon Guidote, SVP for Investor Relations at SM Investments Corp. “Innovation is critical because the world is moving so fast. There’s so much to do for us to catch up.”

In her presentation during Friday’s The 5th Business Forum, organized by The Manila Times, in Davao City, Guidote says the $16.5-billion SM Investments trails CK Hutchinson Holdings Ltd with $45.6 billion, Jardine Matheson Holdings Ltd ($44.6 billion), and three other conglomerates in Asia, while the $17.7-billion SM Prime Holdings trails 10 other companies after Sun Hung Kai Properties at $40.5 billion. Its BDO Unibank, Inc., on the other hand, is ranked 64th with $10 billion as against the No. 1, China’s ICBC or Industrial and Commercial Bank of China Limited at $234.5 billion.

Guidote says despite a number of challenges, there are also new opportunities borne out of new industries PHOTO BY RUSSELL PALMA

“The SM and its subsidiaries are still far from the size and depth of its Asian peers,” says Guidote, who tells her audience that her presentation is solely her own views and not of SM’s, during the forum dubbed “The Philippine Economic Outlook for 2017: Peace Toward Sustainable Development,” held at the Marco Polo Hotel. Despite a number of challenges, however, there are also new opportunities borne out of new industries, such as self-driving cars, quantum computing, artificial intelligence, and the bitcoin, among other sectors.

“So we need to cope with new paradigms through innovation,” she says in her presentation titled “Moving Toward Our Economic Potential,” where she also talks about the country’s “missed opportunities,” owing to lost revenues brought about by corruption, as well as the drug menace that could adversely affect the national economy if left unattended (see cover story). She says that besides focusing on innovation and providing good jobs to the citizenry, business organizations must rise above divisiveness and destructive politics, take a long-term view of the future, and support the MSMEs or micro, small and medium enterprises.

Over a 10-year period, SM posted an 18.55-percent rise in CAGR or compound annual growth rate at P295.877 billion in 2016 from P53.965 billion in 2006, with a net income of P28.455 billion from P8 billion for the same period, registering a 13.5-percent CAGR. The nominal GDP, on the other hand, has a 10-year CAGR of 8.71 percent at P14.45 trillion in 2016 from P6.271 trillion in 2006. (Nominal GDP is is gross domestic product evaluated at current market prices. GDP is the sum of goods and services produced in an economy in a given period.)

“So SM’s growth track outperforms the Philippine economy,” Guidote stresses, saying that from a small-scale business, the SM has grown into a “profitable” conglomerate with “strong balance sheets.” SM Prime Holdings, for instance, is ranked No. 1 at the Philippine Stock Exchange (PSE) with a market capitalization of $17.6 billion as of this month from $1.58 billion at end-2005 (PSE rank, 8th). The retailer giant SM, on the other hand, is at second place on the PSE with a market capitalization of $16.5 billion as of this month from $2.56 billion at end-2005, and BDO (ranked 5th) has $10 billion for a market capitalization from $640 million for the same period.

Guidote says SM malls and its related businesses now have a business footprint of 45 percent of its gross floor area (GFA) of 7.34 million square meters in Metro Manila, whose population is 14 million; 33 percent in the whole of Luzon, with 44 million people; 15 percent in the Visayas, with 19 million people; and 7 percent in Mindanao, whose population is 24 million. Forty-five percent of BDO’s 1,028 branches, on the other hand, are found in Metro Manila, 28 percent in the whole of Luzon, 11 percent in the Visayas, and 16 percent in Mindanao.

“We have focused on inclusive growth and long-term sustainability for our growth drivers,” Guidote tells an audience of about 350 business executives, diplomats, politicians, and government officials. Inclusive growth, she explains, may be obtained through social and environmental sustainability programs. She says the conglomerate has likewise taken a catalyst role in underdeveloped locations around the country, supported and mentored MSMEs and other entities that generate jobs, cultivated a culture of innovation, and created synergies among its core businesses. She adds, “And we have also walked the talk in cultivating good governance within the organization.”

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Senior Vice President, Investor Relations and Corporate Communications, SM Investments Corporation

FOR MORE than 15 years before joining SM Investments, in 2006, Guidote held executive positions in the Philippine and Hong Kong offices of international stockbroking firms like BZW, Citibank Securities, UBS Securities, and ABN AMRO Asia Securities. Then she shifted to investor relations (IR), a career she has been focusing on for nearly 17 years now, starting with the Metro Pacific Corp., where she was appointed group vice president for CorpComm & IR.

In 2001, Guidote was invited to join the Bangko Sentral ng Pilipinas (BSP) as executive director for IR, putting on hold her path in the corporate world. Having pioneered the IR office for the Philippine government, she eventually served as IR consultant at the Office of the President. Then it was back in the corporate world for her as one of SM group’s senior executive officers.

A certified public accountant, Guidote is a fellow at the Institute of Corporate Directors, a not-for-profit organization dedicated to the professionalization of corporate directorship in line with global principles of good corporate governance. She earned a Chevening Fellowship from the UK’s Foreign and Commonwealth Office, and has a master’s degree in applied business economics from the University of Asia and the Pacific. She finished her bachelor’s degree at the University of Santo Tomas.


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