DESPITE rising inflation, the Philippines’ biggest mall developer and operator reported a double-digit increase in its profit in the first quarter, adding that it expects the strong momentum to continue for the rest of the year.
In a disclosure to the Philippine Stock Exchange, SM Prime Holdings Inc. said its consolidated net income grew 12 percent to P2.12 billion in the January to March period from the P1.89 billion recorded in the same three-month period in 2010.
Revenues jumped 13 percent to P6.07 billion, driven by the 14-percent growth in rental fees on higher same-store rentals and revenues from new mall openings last year.
“If there was a spending issue, it did not reflect in our first quarter performance,” Jeffrey Lim, SM Prime chief financial officer, said.
Despite inflationary concerns triggered by the Japan and Middle East crises, Lim said the company can sustain its double-digit growth for the rest of the year.
“While we keenly monitor the current economic developments such as inflation and fuel price hikes, as well as the political situation in the Middle East, we remain optimistic that the company’s growth trend seen in the first quarter will be sustained,” Hans Sy, SM Prime president, said.
For 2011, SM Prime will allocate P18 billion for its capital expenditure spread evenly between its domestic and China expansion. The amount is lower than the P20 billion that was earlier disclosed because certain land acquisitions did not push through.
From the current 5 percent, SM Prime’s China operations are expected to account for more than 7 percent to 10 percent of the business beyond 2013 when the company has seven operating malls having a combined gross floor area of 1.27 million square meters in the world’s second biggest economy.
SM Prime has malls in Xiamen, Jinjiang and Chengdu with a combined gross floor area of 405,777 square meters. It will open SM Suzhou in the third quarter, SM Chongqiing in 2012, and SM Zibo as well as SM Tianjin, its biggest mall upon completion with a gross floor area of 530,000 square meters, in 2013.
SM Prime plans to spin off its China development into a real estate investment trust or through listing at the Hong Kong or Singapore bourses by 2013.
“We have to see whether the value is in the range of $500 million. If we’re able to probably generate that $500 million by that time, we will consider a separate listing,” said Lim.
SM Prime is also spending P4.5 billion to build its fourth biggest mall in the Southroad Properties in Cebu, which is part of 30-hectare mixed-use development called SM Seaside City.
The shopping mall will have a gross floor area of 241,600 square meters, and would feature an IMAX theater, an 18-lane bowling center, ice-skating rink and a roof garden.
Scheduled to open this year are SM City Masinag in Antipolo City, SM City San Fernando in Pampanga and SM City Olongapo in Zambales. The company is also set to expand two of its existing malls in the Philippines this year, namely SM City Davao in and SM City Dasmariñas in Cavite.
By the end of this year, SM Prime will have 43 malls in the Philippines and four in China with an estimated gross floor area of 5.9 million square meters.
SM Prime shares were unchanged at P11.70 each on Tuesday.