SMIC sets P12-B capex program

SMIC sets P12-B capex program
By Zinnia B. Dela Peña
The Philippine Star 01/09/2006
http://www.philstar.com/philstar/NEWS200601090701.htm

SM Investments Corp., the listed investment holding company of retail tycoon Henry Sy, is setting aside P10 billion to P12 billion for its capital expenditures this year to bankroll the expansion of its shopping mall, banking and call center operations.

SMIC executive vice-president Jose T. Sio said P4 billion of the programmed capital budget will go to the construction of new shopping malls to further strengthen its dominant foothold in the industry.

Sio said about P1.5 billion has been earmarked for the establishment of a 10-story building for call center companies that have been looking at the Philippines for expansion. The building will be located at the SM Group’s biggest mall to date, Mall of Asia, which sits on a 60-hectare property overlooking Manila bay.

Envisioned to be the biggest shopping and tourism destination, the Mall of Asia will incorporate hotel, leisure and entertainment facilities, and residential and office condominiums. It is slated for opening in the latter part of February.

Sio said Dell Inc., the world’s largest maker of personal computers, has leased 14,500 square meters (145,000 square feet) of space in Mall of Asia, cornering about 3.8 percent of the commercial complex.

Dell’s Philippine call center, its second in Asia, will handle calls from the company’s customers in the United States and will hire 700 people. This is expected to boost customer traffic in the Mall of Asia.

Aside from the call center building, the SM Group also plans to put up a Central Business Park which will house a convention/conference center with a gross floor area of 12,000 square meters.

To be called Arena, the convention center is expected to serve as an attractive scenic venue for major conferences, trade exhibits and shows and similar activities in Metro Manila.

Plans are also underway for the development of Hamino Cove, a beach resort to rise in Batangas.

Apart from Mall of Asia, four other malls are up for completion or opening this year. These include SM City Lipa (Batangas), SM City Sta. Rosa, Laguna, SM City Bacolod and SM Subic. Also expected for opening this year is the expansion of the SM City North shopping complex.

SMIC has interests in the property development, retail sale, wholesale and merchandising, banking and financial services, leisure and tourism and real estate sectors.

SMIC expects to post a 25 percent growth in its net income for the first nine months of its fiscal year ending March 2006, driven by the continued strong performance of its shopping mall and banking units.

From April to September 2005, SMIC reported a net profit of P2.7 billion or an increase of 24.4 percent from the P2.2 billion posted the previous level.

SM Prime Holdings Inc., the SM Group‚s shopping mall concern, continue to be SMIC‚s major income contributor. Its net profit is expected to rise between 10 percent and 12 percent in 2005, boosted by increased consumer spending during the Christmas holidays as a result of increased inflow of overseas Filipino workers‚ remittances.

Banco De Oro, in which SMIC holds a 46.6 percent stake, is seen to sustain a 30 percent gain in its net profit, in the nine months ending September last year, BDO posted a P1.17 billion net profit or an improvement of 41 percent. China Bank, in which SMIC owns 21 percent, reported a 19 percent growth in its income to P1.61 billion.

Accounting for 72 percent of SMIC‚s total revenues, retail sales rose 7.9 percent in the period April to September this year to P18.2 billion, mostly due to the contribution of new SM Department stores in Batangas and Dasmarinas and the reopening of the SM Department store in Delgado, Iloilo.

The company‚s retail business now operates a total of 24 Department Stores nationwide, including SM San Lazaro, which opened in July of this year.