Pasay—(PHStocks)—SM Prime Holdings Inc. (PSE: SMPH), the Philippines’ leading integrated property company, reported a consolidated net income growth of 15% to PhP4.9 billion in third quarter of 2016 from PhP4.2 billion in the same period last year. Overall revenues in the third quarter also went up by 14% to PhP18.5 billion from PhP16.3 billion. This brought nine months consolidated net income to PhP17.5 billion from PhP15.5 billion, a 13% increase from same period last year. Overall revenues of the company improved by 11% to PhP57.8 billion from PhP52.2 billion in the first nine months driven by the sustained growth of its key business units – rental operations and real estate sales.
“SM Prime sustained its overall performance as it benefited from the continued growth of the economy. The synergy and contribution of our business units are reflected in our strong results. We expect SM Prime’s success to continue over the medium-term as economic growth spread to the rest of the Philippines, which should bode well with our expansion in other key cities and provinces,” SM Prime President Jeffrey Lim said.
Philippine overall mall revenues increased by 9% to PhP32.1 billion from PhP29.4 billion. Rentals posted an 11% growth to PhP26.9 billion from PhP24.2 billion. This was driven by a 7% growth in same-mall-sales, as well as new retail spaces of 1 million square meters (sqm) in gross floor area (GFA) that were added in the past two years. Cinema and event ticket sales are at PhP3.44 billion, slightly higher from last year’s performance of PhP3.4 billion. Revenues generated from amusements and merchandise sales posted the same amount of PhP1.8 billion from same period last year. Operating income increased by 10% to PhP17.8 billion from PhP16.1 billion in the same period last year as margins slightly improved to 55.3% from 54.9%.
Meanwhile, SM Prime’s China mall revenues rose by 5% to PhP3.1 billion from PhP2.9 billion; while its operating income grew by 6% to PhP1.5 billion from PhP1.4 billion, maintaining the previous year’s operating income margin of 49%.
Currently, SM Prime has 58 malls in the Philippines and six in China with a GFA of 8.5 million sqm. SM Prime is scheduled to open SM East Ortigas this December while SM City Tianjin will open in phases towards the end of the year. By the end of 2016, SM Prime will have a combined GFA of almost 9 million sqm.
SM Prime’s residential group, led by SM Development Corp. (SMDC), contributed 32% to consolidated revenues and grew by 10% to PhP18.7 billion from PhP16.9 billion in the same period under review. Operating income, likewise grew by 10% to PhP5.1 billion from PhP4.6 billion. The growth was largely due to the sales take-up on ready for occupancy (RFO) units from projects such as Princeton Residences, M Place Residences, Mezza II Residences and Jazz Residences in the cities of Quezon and Makati. Consolidated costs of real estate increased by 8% to PhP9.6 billion from PhP9.0 billion resulting to improved gross profit margins of 48% from 46% for the residential group; while net income margin stood at 23% from 22% in the same period last year.
SMDC’s reservation sales jumped by 22% growth in sales value to PhP35.5 billion in the first nine months of the year from PhP29.1 billion last year. This is equivalent to a 20% increase in unit sales to 12,579 units from 10,520 units. The strong sales take-up is attributed to projects that are within and near the Mall of Asia Complex in Pasay City, namely S Residences, Shore 2 Residences and Coast Residences.
To date, SM Prime has launched three new projects and expanded its existing developments equivalent to 6,000 units in the cities of Las Pinas, Pasay and Taguig. SM Prime is set to launch new and expanded housing projects in the cities of Quezon, Pasay, and Tagaytay. The launch also includes economic housing projects in the provinces of Bulacan.
The Commercial Properties Group, which accounted for 3% of consolidated revenues, posted a growth of 44% in revenues to PhP1.9 billion from PhP1.3 billion year-on-year. This led to rising operating income of PhP1.4 billion from PhP700 million, which in turn enhanced the operating income margin to 75% from 56%. The growth came from the new rental revenues of FiveE-com Center. SM Prime’s Commercial Properties Group presently has six office buildings mostly at the Mall of Asia Complex in Pasay City with an estimated GFA of 371,000 sqm. The company will add more office spaces in the coming years as ThreeE-Com and FourE-Com Centers are currently under construction.
The Hotels and Convention Centers revenues are up by 23% to PhP2.1 billion from PhP1.7 billion on the first nine months of the year. Operating income grew by 6% to PhP330 million from PhP312.0 million. Revenues are buoyed by the improvement in average room and occupancy rates. The opening of Park Inn in Clark last December 2015 and Conrad Manila in Pasay City last June also boosted the overall performance of the hotel group.
SM Prime remains committed to its role as a catalyst for economic growth, delivering innovative and sustainable lifestyle cities, thereby enriching the quality of life of millions of people.