SM Investments ramping up capital spending
SM INVESTMENTS Corp., the holding firm of the country’s richest man Henry Sy, Sr., is hiking its capital expenditure budget for the year, as it eyes acquisitions in high growth sectors of the Philippine economy.
In a briefing after the stockholders’ meeting on Wednesday, SM Senior Vice-President Franklin C. Gomez said the conglomerate is planning to spend P75-90 billion this year, which will be financed mainly through internally generated funds.
Property firm SM Prime Holdings, Inc. will get the lion’s share of the capex at P80 billion, while the retail segment will corner roughly P5 billion of the spending plan. The balance will go to the banking units.
The conglomerate had budgeted P65 billion for capex in 2017.
“The government’s focus on spurring provincial growth and the momentum of which infrastructure, agriculture and tourism development (are) pursued gives fuel to our expansion plan,” SM President Frederic C. DyBuncio said.
SM downplayed the impact of the scrapped deal to purchase Goldilocks Bakeshop, Inc. on future transactions. The conglomerate abandoned the acquisition of Goldilocks after securing the go- signal from the Philippine Competition Commission, citing changes in the general business environment.
“We think that’s just a one-off event. We don’t think it will have an effect in the way we do our business and expansion or growth plans moving forward,” Mr. DyBuncio said.
The conglomerate is pursuing investments that will complement existing businesses, while capturing the highgrowth trajectory of the Philippine economy.
Future acquisitions do not have to be industry- specific, Mr. Gomez said, noting that SM is taking into consideration growth potential, dominant market position, prospects for higher yield and strong management.
SM is also “focused” on opportunities in the e- commerce space that has disrupted the retail and shopping mall businesses in the United States.
“That’s an area which we believe is still in the early stage, but it will eventually happen so at this point we continue to explore which or how we can get into the e- commerce space,” Mr. DyBuncio said.
SM is not keen on investing in businesses that will put SM in competition with its customers such as fast-moving consumer goods, and food and beverage, Mr. DyBuncio said. The conglomerate also downplayed a possible investment in telecommunications because of the capitalintensive requirements of the industry.
“We’d rather be involved in businesses we are more familiar with where we could grow together with our partners and really have synergies with the rest of the group,” Mr. DyBuncio said.
SM’s portfolio now includes Belle Corp., Atlas Consolidated Mining and Development Corp., CityMall Commercial Centers, Inc., Philippine Urban Living Solutions, Inc., the Net buildings and 2Go Group, Inc.
SM delivered a 6% growth in earnings to P32.9 billion in 2017, higher than the P31.2 billion it posted in the prior year, fueled by the continued expansion of its core businesses.
Shares in SM fell P12.50 or 1.4% to close at P882.50 apiece on Wednesday.