SM Investments Corporation

...nice may tatambayan na sila doon Tongue

SM opens 1st mall in eastern Visayas

SM PRIME Holdings, Inc. is expanding in Eastern Visayas region with the opening of a new mall in Ormoc, Leyte.

In a disclosure, the listed property developer said SM Center Ormoc covers 20,000 square meters, with 85% of the space already leased out. Among its stores include SM Supermarket, SM Appliance Center, Watsons, Ace Hardware, Simply Shoes, Surplus, Miniso, as well as Banco De Oro.

The mall also has an al fresco dining area on its second level, and four SM Cinemas, including a Director’s Club Cinema.

“It is SM Prime’s pride and joy to finally open our first mall in the Eastern Visayas Region. SM Center Ormoc will be a great addition to the growing local economy of Ormoc City and the continuously developing province of Leyte. We look forward to more growth opportunities for the people of this region along with SM’s brand of lifestyle and entertainment,” SM Prime President Jeffrey C. Lim said.

SM Center Ormoc brings to 79 the number of SM malls, which include seven in China.

In the first nine months of 2018, SM Prime has opened four new malls, namely SM Center Imus in Cavite, SM City Urdaneta Central in Pangasinan, SM City Telabastagan in Pampanga and SM City Legazpi in Albay.

SM Prime’s 9-month net income climbed 17% to P23.44 billion, after a 16% surge in revenues to P34.91 billion. Its shopping mall business contributed 58% to its revenues during the period.

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...very nice move Ikea Smile  as SM is the mall that draws the most number of people

Ikea allots P7B for Philippine store

IKEA is set to open its first Philippine store at the Mall of Asia complex by end-2020.

IKEA has allocated an initial investment of P7 billion to set up its first Philippine store, which at a leased area of 65,000 square meters is described by the Swedish furniture retailer as its largest in the world.

Christian Rojkjaer, managing director Ikea Southeast Asia, said the store would have around 9,000 well-designed, functional home furnishing products, and could be the brand’s first stop before expanding outside Metro Manila.

“Everything is open right now. But I could imagine there will be some more stores in Manila and then we’re going further out potentially with e-commerce first, but I think we’re going to focus on Manila for a while,” he said in an interview during the launch of Ikea’s pre-opening website at the Mall of Asia in Pasay City ahead of the store opening in end-2020.

Asked about the potential other stores, he said: “We don’t know. We are looking into it.”

“The world is changing so fast — big stores, small stores, e-commerce. We are looking at the totality, but we will expand in the Philippines,” he said.

Mr. Rojkjaer said the company, which owns the Ikea stores in Singapore, Malaysia and Thailand, plans to hire around 500 Filipino workers and would create hundreds of spin-off jobs and business opportunities.

Those business opportunities include local partners to support operations in areas such as logistics, food supply, transport, waste management and security.

“Some of them we have found. But we are still looking for clearing all those contracts here. Lots of contracts. There will be lots and lots,” he said.

The Ikea store will be located between Mall of Asia Arena and SMX Convention Center in an area as big as the size of 150 basketball courts. Company officials said the local store will be almost double the size of a typical Ikea big blue-box.

The shop floor will be similar to other Ikea stores but the building will also house a call center and a supersized warehouse to accommodate e-commerce operations in the Philippines. The store opening will also allow shoppers to shop online and get their orders delivered.

Georg Platzer, Ikea Southeast Asia market development manager, told reporters he would be managing the company’s first store in the Philippines.

“In two years from now, I would love to have opened already. Let’s stick to end of 2020 because it’s quite a complex project. You’ll never know what’s going to happen like it’s a big construction site,” he said.

He said P7 billion is the investment for the retail side, which also covers fitting out, stocking, marketing, and staffing the first store for its opening.

“For us it’s always important that we get as close as possible to the places where many people live. We want to be accessible,” Mr. Platzer said, adding that the store should be about a 60-minute driving distance from its target market.

“Metro Manila is quite dense area already,” he said. “There are not so many open spaces like we found here [Mall of Asia] a perfect block, but we’re still positive that we’re gonna find some more and open more touch points in the future throughout Metro Manila, but also why not the whole Philippines.”

A typical IKEA store has more than 55 inspirational room settings. The self-serve warehouse has flat-packed products ready to be taken home. A supervised playroom for kids is available as well as a restaurant.

Sought for comment, Sweden’s Ambassador to the Philippines Harald Fries, said: “Ikea is probably the Swedish company that builds the most on the Swedish brand, on Swedishness. So whenever Ikea comes into a new country it means a lot for strengthening the image of Sweden in that country in a very positive way.”

Separately, SM Prime Holdings, Inc. said it was set to build another mixed-use building in the Mall of Asia complex that will be its first lifestyle city development in Pasay City. The project will house Ikea’s first store in the country, it added.

SM Prime President Jeffrey C. Lim said in a statement that the addition of the mixed-use facility, and the entry of Ikea, “complements the integrated lifestyle we dreamt” for the Mall of Asia complex.

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...Indonesian pala ito? na dumikit lang sa SM? Tongue  good strategy 

Alfamart to add 200 PHL stores

INDONESIAN mini-mart chain Alfamart is planning to open 200 new stores in the Philippines next year, according to a report by Fitch Ratings.

In its report, Fitch said PT Sumber Alfaria Trijaya Tbk (Alfamart) is aggressively expanding its footprint in the Philippines where it partnered with the SM Group.

Fitch said Alfamart currently has 400 stores in the Philippines, after it opened 180 new stores this year.

It noted Alfamart is planning to open 200 new stores, which will bring its Philippine store network to 600 by end-2019.

“Alfamart’s investment risk for its Philippine expansion is mitigated by the strong presence of SM Group in the country…. Fitch expects Alfamart to have access to SM Group’s large business network and tap its widely known brand,” it said.

Alfamart has a 35% stake in Alfamart Philippines, which is under SM Retail, Inc. SM Retail is part of the Sy family’s holding firm, SM Investments Corp., which also has core interests in property and banking.

As of end-September, SM Retail had 1,729 stores nationwide, namely: 62 SM Stores, 56 SM Supermarkets, 194 Savemore stores, 50 SM Hypermarkets, 52 WalterMart stores and 1,315 Specialty stores.

Fitch also cited similarities between the Philippine and Indonesian market, which works to Alfamart’s advantage.

“Both Indonesia and the Philippines are consumer-driven markets with young populations and expanding middle classes. Both economies have similar income levels of GDP per capita of $3,000-U$4,000. Consumers in both markets also prefer to buy small amounts of bundled products rather than filling grocery carts,” it said.

The mini-mart sector in the Philippines “as untapped and having limited competition,” Fitch said.

“The existing players mostly operate convenience stores that carry more limited products. Alfamart’s stores offer additional products, such as fresh and frozen food, personal care and small household appliances, giving the company some competitive advantage in grabbing market share,” the ratings agency said.

Unlike convenience stores, Alfamart offer basic goods, fresh meat, poultry, vegetables and food-to-go products.

“Alfamart chose to expand in the Philippines as it believes it has more potential than other south-east Asian markets, such as Thailand and Vietnam,” Fitch said.

Fitch said Alfamart’s Philippine expansion may partially offset slowing growth in its home country. It noted Alfamart had 75 net store openings in the first 10 months of the year, after closing some underperforming stores. 

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...nice 'eye' on the market SM, nice eye Smile

SMIC ‘cautiously optimistic’ this year

SM INVESTMENTS Corp. (SMIC) said it is “cautiously optimistic” on the economy this year, while expecting its businesses to sustain its growth.

“We’re still watching the economy, we’re cautiously optimistic of the economy. So for us, it’s business as usual,” SMIC President and Chief Executive Officer Frederic C. DyBuncio told reporters during the company’s media event last Dec. 6 in Makati.

Asked what factors could impact the listed conglomerate’s businesses, Mr. DyBuncio cited ongoing trade war between the United States and China, higher inflation, rising interest rates and peso-dollar rate fluctuations.

“All of those obviously will have some impact here. The degree of that impact we don’t know, we’ll have to wait and see,” Mr. DyBuncio explained.

SMIC’s core businesses include property, banking, and retail, which are primarily consumer-driven. Rising inflation could affect consumers’ spending habits as they adjust to the higher cost of living. This translates to lower profits for businesses, alongside slimmer margins.

Inflation climbed to a nine-year high of 6.7% in September and October, before cooling down to six percent in November. Analysts generally expect inflation to ease this year.

SMIC Vice Chairperson Teresita Sy-Coson, however, noted that sales within the SM Group continued to grow despite elevated inflation last year. She expects the company’s revenues to continue growing this year.

“I think the economy in spite of the inflation, the sales are still growing strong, revenues are going on. So we don’t expect a downtrend,” Ms. Sy-Coson told reporters, noting that the mid-term elections will be a good thing for the consumer sector.

For the property business, Mr. DyBuncio said SM Development Corp. (SMDC) is “very well-positioned” to take advantage of the strong demand.

SMDC, which handles the group’s residential business, booked a 23% increase in revenues to P25.26 billion in the first nine months of 2018, driven by the higher demand for projects from international buyers, overseas Filipino workers, and the emerging middle class.

“All the businesses we have are consumer-focused, and as the economy’s doing well, consumption is doing well, disposable income is increasing, so that’s all very positive for the businesses we’re involved with,” Mr. DyBuncio said.

The company continues to expand its mall business, as it looks to end 2019 with 10.5 million square meters of gross floor area from its shopping malls in the country.

SMIC’s net income attributable to the parent grew by 10% to P26.17 billion in the first nine months of 2018, compared to P23.79 billion it made in the same period a year ago. This came after a 12% year-on-year uptick in gross revenues to P307.42 billion.

2019 SMP Charity/Tsinelas & School Supplies Donation Drive link


Manila Bay rehabilitation hangs over SM’s reclamation project

PROSPECTS OF SM Prime Holdings, Inc.’s reclamation projects in Manila Bay were dimmed by the government’s planned rehabilitation efforts there, making it the most actively traded issue on the market last week.

Data from the Philippine Stock Exchange showed a total of P3.917 billion worth of 103.030 million SM Prime shares having exchanged hands on the trading floor from Jan. 14-18.

Shares in SM Prime stood at P39.40 last Friday, up P1.10 or 2.9% from the P38.30 close the previous day.

On a week-on-week basis, the stock inched up by 1% from its Jan. 11 close. It climbed 6.5% for the year.

“The sharp decline in [SM Prime’s] price last Wednesday was a dramatic reaction to the DENR’s (Department of Environment and Natural Resources) planned rehabilitation of Manila Bay, which investors believe, will conflict with the plans of [SM Prime] to reclaim around 600 hectares in the vicinity (Pasay/Parañaque),” said Manuel Antonio G. Lisbona, PNB Securities, Inc. president.

The DENR announced last Tuesday it will unveil its P43-billion Manila Bay rehabilitation plan on Jan. 27, as well as the list of establishments initially found to be non-compliant with the Philippine Clean Water Act of 2004.

Meanwhile, the Department of Interior and Local Government said that reclamation projects in Manila Bay should be shelved for the planned rehabilitation to succeed.

The day after the announcement, many investors took profits on the stock with a total of P1.626 billion worth of SM Prime shares having been traded that day. This sent the stock’s price to as low as P36 per share from its opening day price of P39.60 apiece. Some traders then took positions, bringing the price up to P37 per share by the day’s end.

To recall, the cities of Pasay and Parañaque both awarded in 2013 and 2014, respectively, to SM Prime separate contracts to reclaim and develop about 300 hectares each in Manila Bay for P54.5 billion and P50.19 billion.

About P100 billion will be spent for the reclamation and development of the two parcels of land.

Moreover, three major reclamation projects were green-lit by the cities of Manila and Pasay in October last year, namely: Manila Goldcoast Development Corp.’s 148-hectare Solar City; SM Prime’s 360-hectare project; and Pasay Harbor City consortium’s 265-hectare development.

Asked on how the planned Manila Bay rehabilitation will affect the prospects of SM Prime, Regina Capital Development Corp. Managing Director Luis A. Limlingan said: “It’s not so much the rehabilitation efforts, but more of whether the plans would be put on hold because of different interest groups.”

“The outcome will really depend on the extent of the conflict between the plans of DENR and [SM Prime],” PNB Securities’ Mr. Lisbona said.

“However, we believe that [SM Prime’s] management has already prepared alternative courses of action considering the issue (cleanup and rehabilitation of Manila Bay) is not a new one,” Mr. Lisbona added.

The property holding firm of the Sy family posted a P6.817-billion net income attributable to equity holders in the three months ending in September, up by 20.4% from the P5.660 billion recorded in the same comparative period in 2017.

This brought the nine-month net income to P23.439 billion, which rose by 16.9% from the previous year.

“Our latest forecast net income for 2018 is P30.7 billion and was driven [from] a mix of growth in mall revenues, rental income, and sales from their condominium development (via SM Development Corp.),” Mr. Lisbona of PNB Securities said.

He projects SM Prime’s profit at P36.8 billion this year.

Meanwhile, Regina Capital’s Mr. Limlingan sees a P32.6-billion net income for SM Prime in 2018 and P36.2 billion for 2019.

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