SM INVESTMENTS Corp., the listed holding firm of tycoon Henry Sy, reported a 14% jump in net income in the three quarters ending September, buoyed by revenues from its retail merchandising, shopping mall and property businesses.

In a statement, SM said it posted a net income of P8.5 billion for the period from P7.5 billion in the same period last year.

Excluding extraordinary items, recurring income increased by 22% to P6.2 billion, the company said.

Consolidated revenues almost doubled to P82.6 billion from P42.2 billion as a result of the good showing of its retail merchandising business.

SM Investments’ operating expenses, meanwhile, grew to P13.8 billion.

Retail merchandising, which accounted for 82% of total consolidated revenues, had net income growing to P2 billion, while revenues stood at P65.2 billion primarily due to its acquisition of SM Supermarkets and Hypermarkets last year, the expanded operations of all stores, and a generally buoyant consumer market, the company said.

Mall operator delivers

Mall operations under SM Prime Holdings, Inc., meanwhile, realized P11.2 billion in gross revenues and a net income of P4.3 billion.

Cinema operations and amusement generated revenues at P1.9 billion. The group’s real estate and property development business amounted to P2.2 billion, while net income stood at P700 million, mainly driven by residential condominium sales from SM Development Corp. (SMDC).

For the period under review, SMDC increased its net income to P791.8 million on the back of the threefold growth in real estate sales to P1.29 billion from the previous year’s P308.7 million.

‘Moving forward, the property group will see additional revenue streams from commercial, tourism, and hotel developments as projects are completed starting from 2008,’ it said.

Banking and financial service providers Banco de Oro Unibank and China Bank posted a consolidated net income of P4.9 billion and P2.5 billion, respectively.

As this developed, SM Prime has completed acquisition of the Sy family’s three SM malls in China for P10.8 billion.

In a statement, the listed mall operator said its board of directors approved the move, and added that the acquisition would be done through a share swap wherein it will issue 913 million new shares to the Sy family.

The acquisition price was based on a 30-day volume weighted average price of P11.86, SM Prime Executive Vice-President Jeffrey C. Lim told reporters in a recent briefing.

‘The move will allow SM Prime to gain a foothold in China’s fastest growing economy and use this as a platform for long-term growth outside of the Philippines where it is already the dominant mall developer,’ the company said.

China malls

Mr. Lim said the malls are similar to the SM malls in the Philippines, with a gross floor area between 120,000 to 170,000 square meters.

SM Xiamen, which began operations last December 2001, has a population of two million and is already 100% occupied. SM Jinjiang enjoys a 74% occupancy rate and an eight million population after opening November two years ago.

SM Chengdu, which opened October last year, is already 71% occupied with a population as large as Metro Manila at 11 million.

‘While SM Prime continues to expand its operations in the Philippines, its planned acquisition of the China malls will provide its shareholders the opportunity to tap and take advantage of the high growth prospects offered by China, being Asia’s growth leader,’ SM Prime President Hans T. Sy said in a statement.

SM Prime also said subject to the availability of suitable locations, it may initially build one to three malls a year and will focus on expanding in second- and third-tier cities that it believes will have a ‘strong growth given the expansion of the middle-income sector and rising consumer spending.’

Search for financial advisor

‘The company will engage an independent financial advisor to review the valuations within 2007 and expects to enter into definitive agreements in connection with the acquisition in early 2008, and subject to regulatory approvals to complete the acquisition within the first half of 2008,’ it said.