SMIC sees more opportunities in provincial areas

SM INVESTMENTS Corp. (SMIC) sees growth opportunities in provincial areas for its core businesses, the company’s president said.

“Each of our core businesses will continue to grow, particularly in the provincial areas, whether it be the banking, the property, or the retail. But more importantly, our portfolio companies are where we feel the high-growth sectors will be, and that’s where our investments are very focused on,” SMIC President and Chief Executive Officer Frederic C. DyBuncio.

Timothy Daniels, SMIC consultant for investor relations and sustainability, said that the conglomerate maintains a cautiously optimistic outlook this year despite its strong financial performance in 2023.

“Looking at 2024, we always use the word ‘cautious’ before we use the word ‘optimistic’ because we operate in an environment where things may happen by surprise, and there are external shocks outside the Philippines. But we remain cautiously optimistic,” he said.

External risks, such as geopolitical issues, could hamper the conglomerate’s growth this year, Mr. DyBuncio said.

“What is more concerning is the impact of whatever external factor there might be in geopolitics. When that happens, it affects the supply chain, it affects prices of commodities, and then it eventually affects inflation. Those can affect our businesses, but it is really more external driven,” he said.

“We don’t see any internal issues other than inflation that might affect our businesses,” he added.

SMIC aims to grow the revenue contribution of its portfolio investments in the “teens” within the medium term, led by its business interests in renewable energy and logistics.

“We’re hoping to be able to continue to grow (the revenue contribution of portfolio investments) in the teens. That is our objective. But again, it grows while the core also improves,” Mr. DyBuncio said.

SMIC’s portfolio investments accounted for 9% of the P616.3 billion worth of total revenue generated last year.

Mr. DyBuncio said that SMIC is investing more in the renewable energy sector. The conglomerate has a presence in renewable energy through its subsidiary Philippine Geothermal Production Co.

“On the company’s geothermal business, we have two producing assets but we do have six other concessions that we are planning to develop,” he said.

In terms of logistics, Mr. DyBuncio said that SMIC is seeking to expand 2GO Group’s network across the country.

“We bought two new ships in December and January and we’re looking to acquire another one because we really believe that the growth is there,” he said.

“Right now, our expansion plans (in the logistics business) are all organic. But we are always open if there is a business out there that we can attach to it as long as it’s going to be synergistic to us,” he added.

Mr. DyBuncio also said that SMIC is considering the establishment of data centers in the country due to increasing demand.

“We are looking at data centers because we believe that given the advent of artificial intelligence, there will be a greater need for servers to store all of this data,” he said.

SMIC recorded a 25% growth in its 2023 net income to P77 billion. Its consolidated revenues climbed by 11% to P616.3 billion led by stronger consumer spending.

On Thursday, SMIC shares rose by 2.96% or P27 to P940 each.