Philip­pine bil­lion­aire Sy’s SM In­vest­ments up­beat on new growth en­gine

New Straits Times - - Business World - LMOST 60 years af­ter turn­ing a shoe shop, here, into a bank­ing-toprop­erty con­glom­er­ate that’s made him the rich­est man in the Philip­pines, bil­lion­aire Henry Sy has found the next growth en­gine for his group: lo­gis­tics. Sy’s SM In­vest­ments Corp is countin

high-growth sec­tors to com­ple­ment its main busi­nesses.

SM stands for Shoe­mart, the name of the orig­i­nal store Sy opened in 1958.

DyBun­cio, who took over from the founder’s son Har­ley Sy last month, has said he’ll look to the com­pany’s share price as a mea­sure of his per­for­mance.

He will need fast-grow­ing busi­nesses to con­tinue driv­ing the stock higher as his pre­de­ces­sor over­saw a more than a six-fold in­crease since the shares be­gan trad­ing in 2005.

Lo­gis­tics can grow at least two times faster than the econ­omy, ac­cord­ing to DyBun­cio, who has been look­ing at in­vest­ment op­por­tu­ni­ties in lo­gis­tics over the past two years.

Eco­nomic growth is boost­ing de­mand for ship­ping, ware­houses and port fa­cil­i­ties na­tion­wide.

Shares of 2GO climbed as much as 21 per cent to 25 pe­sos (RM2.15), the high­est since the com­pany’s 1995 listing, be­fore par­ing gains to trade at 23.40 pe­sos as of the midday trad­ing break, here, yes­ter­day.

The Philip­pines plans to spend as much as nine tril­lion pe­sos on in­fras­truc­ture from this year to 2022 to boost South­east Asia’s fastest grow­ing econ­omy.

“You can’t have faster eco­nomic growth with­out lo­gis­tics,” said Gon­zalo Bon­golan, vice-pres­i­dent at Philip­pine Com­mer­cial Cap­i­tal Inc, an in­vest­ment bank. “Lo­gis­tics and the last mile of dis­tri­bu­tion will be­come more crit­i­cal as com­mer­cial ac­tiv­i­ties mul­ti­ply.”

2GO is the largest provider of so-called endto-end lo­gis­tics ser­vices in the Philip­pines.

The com­pany, which has a fleet of 24 ships, had a 90 per cent pas­sen­ger mar­ket share and cor­nered 38 per cent of cargo that passed through the ports where it op­er­ated.

Net i ncome will j ump about 14 per cent this year to 35.4 bil­lion pe­sos, based on the av­er­age of seven an­a­lyst es­ti­mates com­piled by Bloomberg. That would be the fastest growth since the 16 per cent ad­vance in 2012.

SM In­vest­ments in­di­rectly owns about 30 per cent of 2GO.

SM In­vest­ments’ two other ma­jor units are SM Prime, the na­tion’s largest shop­ping mall op­er­a­tor, and SM Re­tail Inc, the biggest Philip­pine re­tailer with 2,303 out­lets.

As for the lo­gis­tics busi­ness, DyBun­cio said he was not cer­tain it would be­come a core busi­ness on the scale of the bank­ing, prop­erty and re­tail main­stays.

“Is it go­ing to be big enough that we can say it’s a fourth leg? We need to see what hap­pens in the next few years,” said DyBun­cio. “We might be able to find the fourth leg but it will prob­a­bly be a short leg given the size of the group’s three core busi­nesses.”

Ricky DyBun­cio

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