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SMDC raises 2011 outlook after better-than-expected 1Q earnings

SM Development Corp. (SMDC) reported better-than-expected earnings in the first quarter on higher sales, raising expectations of a double-digit growth this year.

In a statement, the housing arm of the SM group said its consolidated net income grew 45 percent to P916.3 million in the January to March period from P632.4 million in the same three-month period last year, and well above the company’s profit projection of P700 million.

Consolidated revenues climbed 70 percent to P3.4 billion after revenues from real estate operations advanced 69 percent to P3.3 billion from P1.9 billion last year.

The company attributed its strong performance to a bigger sales volume and higher incremental completion rates of ongoing projects. It pre-sold 2,480 residential units worth P5.6 billion in the first three months.

“We’re looking at 10-percent to 20-percent [growth in net income], but at the rate we’re going, we might go higher,” said Henry Sy Jr., SMDC vice chairman and chief executive.

The company earlier issued a profit guidance of P4 billion this year, up 33 percent from the P3 billion in 2010.

“There are so many factors in the markets in the past few months like the Middle East. We are endeavoring to achieve those numbers but we would like to be conservative,” said Rosaline Qua, SMDC senior vice president and chief operating officer.

The company has earmarked over P20 billion for its capital expenditure this year.

SMDC will launch at least five new residential projects under its SM Residences and MPlace brands, namely MPlace Ortigas, Green Residences beside De La Salle University in Taft Avenue, Shell Residences in the Mall of Asia complex in Pasay City, Grass Residences Premiere in Quezon City and the second tower of Mezza Residences in Santa Mesa, Manila.

“We are quite bullish that when we launch five projects in the pipeline, the sales will be definitely beyond what we expected,” Qua said

Sy said SMDC can “hopefully” pursue the sale of as much as P10-billion worth of new shares in the first half to fund its new projects and its planned venture into China.

The share sale will also increase its public float to around 25 percent, he said.

“We will go out whenever it is good for us with equity or debt,” said Jose Sio, SM Investments Corp. chief finance officer.

SMDC shares fell to P9.08 on Tuesday from P9.10 on Monday.

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