Sy holding firm allots P95B for 5-year capex

By Zinnia B. Dela Peña
The Philippine Star 04/26/2007

SM Investments Corp. (SMIC), the investment holding company of retail tycoon Henry Sy Sr., will spend P95 billion over the next five years for the continued expansion of its shopping mall, retail and banking operations, as well as initial works on its large-scale eco-tourism project in Nasugbu, Batangas.

In a press briefing following the company’s annual stockholders’ meeting yesterday, SMIC executive vice-president and chief financial officer Jose Sio said bulk of the five-year capital budget will be used for mall developments or expansion.

The group plans to build three to five new malls yearly as it seeks to further solidify its dominant foothold in the shopping mall industry.

Of the P95-billion budget, a total of P20 billion will be spent this year alone for the acquisition of Equitable PCI Bank which will merge with Banco de Oro; the development of SM Bay City, a 60-hectare zone which houses the SM Mall of Asia and the initial phase development of Hamilo Coast.

Hamilo Coast is an integrated residential and resort complex in Nasugbu, Batangas touted to become the largest eco-tourism project in the country.

Last year, SMIC spent P15 billion for its capital expenditures.

Sio said of the 2007 capital budget, P7.5 billion will be funded by SMIC itself while the balance will be come from its subsidiaries, either through internally-generated cash or borrowings.

"We have P19 billion in cash, more than enough to fund our capital expenditures for the year," Sio said.

SMIC earlier raised $300 million from a convertible bond issue.

The company is also close to signing an agreement with an international hotel operator to build a 400-room hotel within the Mall of Asia.

In addition, the group may build another IT hub (Two-Ecom Center) in the latter part of the year. It is likewise studying the possibility of going into coastal development in the Visayas.

Harley Sy, SMIC president, said the company is in the process of consolidating all its real estate investments into one company and this may take two years to complete.

"Our property business is relatively young but holds the most promise for growth and value. It supports a landbank with a size greater than most other property companies. The next five years will bear witness to the emergence of a new vision that will create more structures other than our famous shopping malls," Sy said.

Sy said he is optimistic that 2007 will a be a much better year for the group as SMIC is "expected to benefit from a resurgent economy given its exposure in all the key urban and rural centers nationwide."

"Our vision, our resources and our efforts had been and will continue to be largely focused into creating value for the country and for many generations to come," Sy said.

The SM Group runs one of the largest networks of organized retail stores. As of end- 2006, SM had a total of 29 department stores, 28 supermarkets and nine hypermarkets all over the country.

SMIC’s board likewise approved yesterday a P5.41 cash dividend worth approximately P3.2 billion, equivalent to a 30 percent payout of the company’s 2006 net profit of P10.6 billion.

The company’s board also approved an increase in its authorized capital stock to P7 billion from P6 billion and the declaration of a 4.27 percent stock dividend equivalent to approximately 25 million common shares worth P250 million.

 

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