SM Prime focuses on China Wednesday, September 12, 2012
BusinessWorld By Franz G. Dela Fuente, Reporter
SM PRIME Holdings, Inc., the country’s largest mall operator, prefers to focus the expansion of its mall footprint in China versus other Asian countries as it wants to further capitalize on its expertise of managing and developing malls there before exploring new markets.
“We still see the future in China. We’re just in the tip of the iceberg there. China is big enough for us,” Jose T. Sio, executive vice-president and chief finance officer of SM Investments Corp., SM Prime Holdings’ parent, told reporters in a chance interview in Makati City yesterday, when asked about SM Prime’s expansion plans in Asia.
Mr. Sio declined to elaborate, however, nor comment on whether the company will still pursue earlier-bared plans to possibly expand in other countries such as Vietnam. “Not yet,” he said.
China, the world’s second-largest economy and where the Sy family, SM Prime’s founders, originated, is currently home to four SM malls namely in the provinces of Xiamen, Jinjiang, Chengdu, and Chongqing.
In 2014, SM Prime aims to open the 540,000-square-meter SM Tianjin, the firm’s largest mall yet, as well as SM Zibo in China.
“What we’re saying is that we’re already good in developing malls in China, and it’s not easy for us to go elsewhere. For example, we do not know how to do retail in Malaysia or in other countries,” Mr. Sio explained.
So far, SM Prime’s operations in China have been robust as the firm’s China malls already accounted for nearly 15% of the company’s total revenues as of end-June, Mr. Sio said earlier.
Last month, the company said it will consider listing a unit in the Chinese or Singaporean stock exchanges either by initial public offering or by real estate investment trust upon the completion of 10 China malls, in order to raise capital for its expansion efforts moving forward.
SM Prime was incorporated in 1994 to develop, conduct, operate, and maintain the SM group’s commercial shopping centers and related businesses, according to information posted on the stock exchange Web site.
Last December, SM Prime said it was allocating a P21-billion capital expenditure for 2012.
Out of this total, P14 billion was allocated for the Philippines, while P7 billion was set aside for China.
The amount will be sourced from a mix of debt and internally-generated funds.
SM Prime aims to have a mall portfolio of 46 Philippine malls and five China malls by the year-end, with an estimated combined gross floor area of 6.3 million square meters.
The Sy-led company also is eyeing as much as seven new properties in China for mall expansions as the firm exploits higher consumer spending there, it said last April.
SM Prime hiked its January-to-June net income by 15.22% to P4.92 billion from P4.27 billion last year, anchored on the company’s new malls and brisk sales from both its local and China operations.
Revenues, consisting of rent, cinema ticket sales, and miscellaneous income, rose by 14.64% to P14.57 billion versus P12.71 billion, year on year, while costs and expenses, expanded by 14.70% to P6.79 billion from P5.92 billion in the same period last year.
For the rest of the year, SM Prime is bullish it can sustain its strong profit performance on the back of an expected surge in sales brought about by the Christmas holidays, based on its end-June financial report submitted to the stock exchange.
SM Prime shares fell by 1.13% to P13.94 yesterday from P14.10 at its previous close.