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SM Investments eyes P100-b capex in 2016

Conglomerate SM Investments Corp. of retail tycoon Henry Sy Sr. plans to spend between P80 billion and P100 billion in 2016 as it remains robust on the prospects of the Philippine economy.

SM Investments chief finance officer Jose Sio in an interview over the weekend it would spend the bulk of investments to finance the expansion of property unit SM Prime Holdings Inc., which recently announced a P65-billion capital spending for 2016.

Aside from property development, SM Investments through its units is also engaged in banking, retail and tourism-related projects.

“I would say it would be between P80 billion and P100 billion total group capital expenditures,” Sio told reporters.

SM Investments has earmarked P80 billion in capital expenditures this year.

Sio said the 2016 programmed capital spending was just for recurring business and did not include potential acquisitions of subsidiaries.

“The value of the Philippines is not today. The value of the Philippines is the future because we are on development phase. If you don’t act now for the future, you will be late because our [land] resources are limited,” Sio said.

SM Investments in the first half of the year registered a 10-percent growth in net income to P13.5 billion on the strong performance of core businesses engaged in the banking, real estate and retail sectors.

Excluding extraordinary items, recurring income grew 13 percent during the first half of 2015.

First-half consolidated revenues increased six percent to P138.9 billion from P130.9 billion year-on-year.

The conglomerate’s property business led the growth, increasing its share of consolidated net income to 42 percent. It was followed by the banks with 38 percent and retail with 20 percent.

SM Prime registered consolidated revenues of P35.9 billion, up 8 percent from P33.3 billion in the first six months of 2015, driven by the continued growth of rental revenues as well as higher revenue from completed projects.

Rental revenues from retail and commercial spaces, accounting for 54.2 percent of the consolidated revenues, rose 10 percent in the six-month period to P19.4 billion from P17.7 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. The growth was also boosted by increase in SM Prime’s office spaces.

Total assets of SM Investments at the end of June this year grew seven percent to P721 billion. The group also maintains a healthy balance sheet with a conservative gearing ratio of 38 percent net debt to 62 percent equity.

Share price of SM Investments on Friday ended at P870.50, down P0.50 from previous week’s close.

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