SM Prime Holdings, Inc. — the property holding firm of tycoon Henry Sy, Sr. — saw higher earnings in the third quarter, anchored on the expansion of its core businesses, with an extraordinary gain boosting profits in the first nine months of the year.
HANS SY, president of SM Prime Holdings, Inc., addresses shareholders in Manila on April 14. – AFP
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The integrated property developer told the stock exchange yesterday its net income reached P4.2 billion in the June to September period, up 15% from P3.66 billion a year ago.
Nine-month earnings rose at a faster clip of 70% year-on-year to P22.87 billion from P13.81 billion a year ago, buoyed by a one-time gain of P7.4 billion arising from trading gains on marketable securities booked in the first quarter of 2015.
Excluding this non-recurring item, SM Prime’s profit on a recurring basis jumped 15% to P15.5 billion in the first nine months of the year.
“It’s in line with our estimates. It seems SM Prime will meet our estimates for the year of P23.3 billion on a recurring basis,” Lexter L. Azurin, head of research at Unicapital Securities, Inc., said in a phone interview.
Shares in SM Prime added four centavos or 1.85% to close at P22 apiece on Monday.
Continued growth in rental revenues and higher revenue recognition on completed residential projects pushed consolidated revenues by 9% year-on-year to P52.2 billion in the nine months through September. In the third quarter alone, revenues increased 13% to P16.2 billion from P14.4 billion a year ago.
SM Prime President Hans T. Sy attributed the company’s performance to the expansion of its shopping mall, residential, office and leisure businesses since 2013.
“We expect SM Prime’s growth to be sustained as we continue to increase our mall footprint by 13% this year,” Mr. Sy was quoted in the disclosure as saying.
“We are excited to launch SM Seaside Cebu later this year, a landmark project in the Visayas region. We see Metro Cebu as one of our important growth corridors following our growth track in Metro Manila,” he said.
SM Seaside City Cebu, with a GFA of approximately 461,000 sqm., will open its doors to the public on Nov. 27.
Rental revenues from retail and commercial spaces, which contributed 56% to the consolidated revenues, climbed 11% to P29.4 billion from P26.4 billion in the first nine months of 2015.
Driving growth were the opening of new malls and expansion of shopping spaces in existing malls that boosted its gross floor area by 652,000 square meters (sqm.) in the last two years, the opening of Five E-com Center with a GFA of almost 130,000 sqm., and same-store rental growth of 7% — a pace that has been sustained since 2012.
Real estate sales, which contributed 32% to consolidated revenues, grew 4% year-on-year to P16.6 billion from P16 billion on the back of higher take up and improved construction accomplishment of seven residential projects launched in 2010 to 2013.
SM Development Corp. increased its net profit by 23% year-on-year to P3.8 billion from P3.1 billion.
Consolidated real estate costs slid 1% year-on-year to P9 billion due to improving cost efficiencies, tighter monitoring and control of construction costs. As a result, gross profit margin on real estate sales improved to 46% from 43%, and net income margin rose to 22% from 20%.
Reservation sales — an indicator of future growth — went up by 19% year-on-year to 10,297 units, reflecting a 22% increase in value worth P28.4 billion from P23.3 billion in the same period last year.
Cinema and event ticket sales, which accounted for 6.5% of consolidated revenues, went up by 4% to P3.4 billion at end-September.
Other revenues composed of amusement income from rides, bowling and ice skating operations, merchandise sales from snack bars and sale of food and beverages in hotels stood at P2.8 billion, up 30% from P2.1 billion.