Provincial malls, housing projects drive profits
PROPERTY developer SM Prime Holdings, Inc.’s net income for the first half of the year jumped by 14 percent on the back of strong revenue growth mainly from its mall operations and residential development.
SM Prime said Friday its net income for the first six months rose to P14.39 billion from P12.59 billion in the same period last year.
For the second quarter alone, SM Prime saw profits rise 15 percent to P7.79 billion from P6.75 billion last year.
“SM Prime’s performance in the first half of the year reflects a more balanced revenue and income stream from our various businesses, including the growing contribution from our provincial operations,” SM Prime President Jeffrey Lim told the Philippine Stock Exchange.
“We are happy to report that our investments in the provinces are now bearing fruit, particularly in mall operations given that these account for more than half of our Philippine malls portfolio,” he added.
“In the coming years, we are expecting a growing contribution from our residential group as we are launching more housing projects across the country.”
Retail arm SM Malls contributed 60 percent to SM Prime’s first-half revenues. SM Malls’ revenue contribution rose 10 percent to P25.68 billion from P23.42 billion in the same period last year.
Mall rentals improved by 10 percent to P21.75 billion from last year’s P19.79 billion, driven by the additional 1.1-million square meters (sqm) gross floor area (GFA) of retail spaces from new malls and expansions in 2015 to 2017 as well as by a 7 percent same-mall-sales growth.
However, cinema and event ticket sales were almost flat at P2.35 billion due to fewer blockbuster movies.
Consolidated mall operating income increased by 10 percent to P14.18 billion from P12.9 billion in the first six months last year, while operating margins were stable at 55 percent in the period under review.
SM Prime currently has 63 shopping malls in the Philippines and seven in China with a GFA of 7.8 million sqm and 1.3 million sqm, respectively.
The company is scheduled to open new malls, including SM City Puerto Princesa in Palawan.
SM Prime’s residential group accounted for 32 percent of the parent’s total revenues, with revenue contribution of P13.91 billion, up 5 percent from P13.25 billion last year.
“Revenue growth came from higher construction accomplishments of SM Development Corporation (SMDC) projects launched since 2014. These are Shore 2 Residences in Pasay City, Air Residences in Makati City, Cool Residences in Tagaytay City, Fame Residences in Mandaluyong City, Trees Residences in Quezon City and South Residences in Las Piñas City,” the company said.
Recently launched projects continue to enjoy brisk sales, resulting in 22 percent reservation sales growth to P27.55 billion from P22.60 billion, or an 8 percent increase in unit sales to 8,699 units from 8,078 units. These residential projects are mostly located in the Mall of Asia Complex.
The rest of SM Prime’s businesses posted revenue growth of 43 percent to P3.74 billion in the first half from P2.61 billion last year. The growth was attributed to the rental revenues from the FiveE- comCenter, launched in 2015, and Conrad Manila, which opened last June 2016.
Operating income increased by 49 percent to P1.77 billion from P1.19 billion in the first half of last year, while operating income margin surged 47 percent from 45 percent previously.
Currently, SM Prime has six office buildings with a combined GFA of 383,000 sqm. Three E- Com and Four E-Com Centers are under construction and scheduled for completion in 2018 and 2020, respectively.
These additional office buildings will add an estimated GFA of 320,000 sqm to the company’s office portfolio. Meanwhile, the Hotel and Convention Centers group has a portfolio of six hotels with over 1,500 rooms, four convention centers and three trade halls.
“SM Prime remains committed to its role as a catalyst for economic growth, delivering innovative and sustainable lifestyle cities, thereby enriching the quality of life of millions of people,” the company said.
SM Prime is the property unit of tycoon Henry Sy under the SM Group.