SM Prime Net Income Jumps 90% to PhP18.7B in 1H 2015

Pasay—(PHStocks)—SM Prime Holdings Inc. (PSE: SMPH), one of the leading integrated property companies in Southeast Asia, registered a consolidated net income growth of 90% to PhP18.7 billion from PhP9.8 billion in the first half of 2015. Excluding one–time trading gains on the sale of marketable securities, the company’s recurring income grew by 15% year-on-year to PhP11.2 billion.

Meanwhile, consolidated revenues grew by 8% to PhP35.9 billion from PhP33.3 billion in the first six months of 2015, mainly driven by the continued growth in rental revenues as well as higher revenue recognition on completed projects of its real estate business.

“The strong financial performance posted by SM Prime in the first half of the year is reflective of the benefits derived from a diversified property portfolio as both rental and developmental incomes contributed to the overall performance of the company. The sustained growth could be attributed to the consolidation of SM Prime, which resulted to a strong balance sheet that allowed us to pursue all projects as planned. We are confident that we can sustain this growth in the long-term,” SM Prime President Hans T. Sy said.

Rental revenues from retail and commercial spaces, accounted for 54.2% of the consolidated revenues, recording a 10% gain to PhP19.4 billion from PhP17.7 billion in the first half 2015. The growth in rental revenues was mainly driven by rising contribution from the new malls and the expansion of shopping spaces in existing malls in 2013 and 2014. These include SM Aura Premier, SM City BF Parañaque, Mega Fashion Hall in SM Megamall, SM City Cauayan, SM Center Angono and the expansion of SM City Bacolod with a total gross floor area of 652,000 square meters.

Growth was also propelled by the increase in SM Prime’s office spaces. Aside from the recently launched SM Cyberwest in Quezon City, SM Prime unveiled FiveE-com Center at the MOA Complex last May 2015 which is already fully occupied. Meanwhile, same-store rental remained at 7%, sustaining the growth posted in 2014.

SM Prime’s real estate sales which contributed 34.2% to consolidated revenues, was up by 3% to PhP12.3 billion from PhP 11.9 billion in the same period last year. This allowed the group to post an 8% increase in net income to PhP3.0 billion. Growth was primarily due to the increase in the sales take-up and higher construction accomplishment of projects launched in 2010 to 2013 namely Wind Residences in Tagaytay, Green Residences in Manila, Breeze Residences in Manila, Grace Residences in Taguig, Shore Residences in Pasay, and Trees Residences in Quezon City.

The housing group’s reservation sales grew by 24% year-on-year to 6,868 units in the first half of 2015 translating to a 28% increase in value worth PhP18.8 billion from PhP14.7 billion in the first half of 2014. Most of the reservation sales were generated from Air Residences, Shore Residences, Shore 2 Residences, Fame Residences and Grace Residences in Makati, Pasay, Mandaluyong and Taguig City, respectively.

Cinema and event ticket sales, accounted for 6.6% of consolidated revenues, recovered in the second quarter registering a 7% year-on-year increase to PhP1.4 billion as compared to a decline year-on-year of 8% to almost PhP1 billion the previous quarter. This brought cinema and event ticket sales to PhP2.4 billion in the first half of 2015, almost flat from the same period last year. The recovery of ticket sales in the second quarter were due to big Hollywood movies like “Avengers – Age of Ultron,” “Fast and Furious 7” and “Jurassic World”.

Meanwhile, consolidated costs on real estate declined 1% to PhP6.7 billion compared with last year’s PhP6.8 billion. The decrease was attributed to the improving cost efficiencies, tighter monitoring and control of construction costs implemented since 2012. This boosted gross profit margin on real estate sales from 43% in 2014 to 46% in first half 2015. Net income margin likewise improved from 23% to 24% in the same period.

In the first half of the 2015, SM Prime opened SM Megacenter Cabanatuan and SM City San Mateo last April and May, respectively, bringing the total Philippine operating malls to 52 with a GFA of almost 6.6 million sqm. For the rest of the year, SM Prime is set to open one mall in Metro Manila, SM Center Sangandaan in Caloocan, and two malls outside Metro Manila namely SM City Cabanatuan in Nueva Ecija, and SM Seaside City Cebu. The company is also expanding two existing malls, SM City Lipa in Batangas and SM City Iloilo. Combined, these new and expanded malls will have a total GFA of almost 716,000 sqm. By the end of 2015, SM Prime will have 55 malls in the Philippines and six malls in China with an estimated combined GFA of 8.3 million sqm.

SM Prime currently has 26 residential projects in the market, 24 of which are in Metro Manila and two in Tagaytay. For 2015, SM Prime’s residential arm SM Development Corporation will launch at least five new condominiums with about 12,000-15,000 units in total in the cities of Taguig, Quezon, Mandaluyong, Tagaytay, Las Piñas, Parañaque and Pasay at the Mall of Asia Complex. For hotels and convention centers, Conrad Manila in the Mall of Asia Complex in Pasay and Park Inn by Radisson Clark in Pampanga are expected to open in the last quarter of 2015.

SM Prime will remain 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.