SM conglomerate optimistic on growth prospects for 2024

Conglomerate SM Investments Corp. (SMIC) of the Sy family is cautiously optimistic for 2024, but remains committed to stay on growth mode after solid contributions from its core businesses and higher earnings contribution from portfolio investments, which lifted earnings by a quarter to P77 billion in 2023.

SMIC president and CEO Frederic DyBuncio said 2023 was a very good year for the group, with all of its businesses performing strongly.

He said SMIC’s businesses would continue to grow as long as consumers remain strong and the economy continues to grow.

“For the entire group, 2024 looks like possibly a better year, so we’ll see how it turns out,” DyBuncio said.

The group, however, is cautious over external factors that might impact its businesses.

“For us, when we look at the environment, the external factor is really a big concern for us. We don’t see any internal issues other than any inflation that might affect our businesses. But what is more concerning is the impact of whatever external factor that might be,” DyBuncio said.

“Geopolitics for example. When that happens, it affects the supply chain, it affects the prices of commodities and then it trickles down to eventually affecting inflation. Those can affect our businesses,’’ he said.

Still, SMIC sees a lot of opportunities for growth and expansion in the country.

“When we look at 2024, we are really a group that is on growth mode. We are trying to take all of our business and extend them further into provinces and new cities around the Philippines. There is high growth happening in those places and it is a lot of market opportunities for us to serve more Filipinos. We are, in each of our businesses, looking to create more footprint. We have the resources to do it and that is our strategy,” SMIC consultant for investor relations and sustainability Timothy Daniels said.

SMIC’s core businesses are in retail, banking and property.

DyBuncio said the group would continue to grow these core businesses, while at the same time, aggressively expanding its portfolio investments.

“Our portfolio companies are where we feel the high growth sectors will be, and that’s where our investments are very focused on at the moment,” he said.

Banking had the largest contribution to the company’s net income at 47 percent in 2023, followed by property with a share of 25 percent and retail at 19 percent.

Portfolio investments, meanwhile, accounted for nine percent of SMIC’s earnings in 2023.

DyBuncio said the company would continue to expand its portfolio investments, with the aim of increasing its contribution to overall earnings “in the teens” in the medium-term.

“It would actually fluctuate because even though the portfolio companies are growing, the core businesses are growing as well and they’re so much bigger than our portfolio investments. But we’re hoping to be able to continue growing that maybe in the teens,” DyBuncio said.

For its logistics business, DyBuncio said 2GO has recently purchased two new ships to expand its fleet, with the intention of adding another one.

“Right now, 2GO has actually turned around very nicely over the past two years. It also has a very good year in 2023 and based on our budget, 2024 should also be a good year for us,” he said.

“We’re also investing in the geothermal business which is again a big driver for us,” DyBuncio said.

Philippine Geothermal Production Co. currently has ongoing exploration activities in five new geothermal contract areas which can add up to 250 to 400 megawatts of capacity.

“Right now, our focus really is growing what we already have because we feel there is so much growth potential still that these companies can deliver. But we continue to look as well at other opportunities out there which are industries which are going to be very key in the economic growth of the Philippines,” DyBuncio said.

“We’re looking at data centers for example because we believe that especially given the AI coming in, there’s going to be more need for servers to store all these data. That’s something we’re looking into as well to support the Philippine economy,” he said.