SY-LED SM Prime Holdings Inc., one of the country’s largest integrated property companies, posted a 90-percent growth in consolidated net income for the first half of the year on the back of strong revenue streams from its diversified property portfolio.
In a disclosure to the stock exchange on Monday, the company said consolidated net income nearly doubled to P18.7 billion in the first half from P9.8 billion in the same period last year.
Excluding one-time trading gains on the sale of marketable securities, it said recurring net income grew 15 percent year-on-year .
Consolidated revenue for the first half grew 8 percent to P35.9 billion from the P33.3 billion posted in the same period of last year, driven by continued growth in rental revenues and higher revenue recognition on completed projects of its real estate business.
Hans Sy, SM Prime president, said the strong financial performance for the period was a result of SM Prime’s diversified property portfolio as both rental and developmental incomes contributed to the strong growth.
He also expressed optimism in sustaining the company’s massive growth.
“The sustained growth could be attributed to the consolidation of SM Prime, which resulted to a strong balance sheet that allowed us to pursue all projects as planned. We are confident that we can sustain this growth in the long-term,” he said.
Rental revenue from retail and commercial spaces rose 10 percent to P19.4 billion in the first half, accounting for 54.2 percent of consolidated revenue.
Growth in rental revenue was mainly driven by the construction of new malls and the expansion of shopping spaces in existing malls in 2013 and 2014.
Real estate sales grew by 3 percent to P12.3 billion from the P11.9 billion recorded in the same period last year and contributed 34.2 percent to consolidated revenue.
“Growth [in real estate sales]was primarily due to the increase in the sales take-up and higher construction accomplishment of projects launched in 2010 to 2013, namely Wind Residences in Tagaytay, Green Residences in Manila, Breeze Residences in Manila, Grace Residences in Taguig, Shore Residences in Pasay, and Trees Residences in Quezon City,” the company said in a statement.
By volume, reservation sales of the group’s housing unit SMDC grew by 24 percent year-on-year to 6,868 units for the first half, and were up 28 percent by value P18.8 billion from P14.7 billion recorded in the first half of 2014.
Cinema and event ticket sales recovered in the second quarter, registering a 7 percent increase year-on-year to P1.4 billion against the 8 percent decline of the first quarter, and contributed 6.6 percent to consolidated revenue.
Real estate consolidated costs declined by 1 percent to P6.7 billion from P6.8 billion a year earlier, which was attributed to “improving cost efficiencies, tighter monitoring and control of construction costs implemented since 2012.”
This boosted gross profit margin on real estate sales from 43 percent in 2014 to 46 percent in the first half 2015. Net income margin also improved slightly from 23 percent to 24 percent in the same period.
SM Prime currently has 26 residential projects in the market, 24 of which are in Metro Manila and two in Tagaytay.
For 2015, SM Prime’s residential arm SMDC will launch at least five new condominiums in various locations in Metro Manila. It also plans to launch hotels and convention centers such as the Conrad Manila at the Mall of Asia Complex in Pasay and Park Inn by Radisson Clark in Pampanga, which are expected to open in the last quarter of 2015. Catherine Talavera