TO FUEL SM EXPANSION
Philippine billionaire Sy’s SM Investments upbeat on new growth engine
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.”