Pasay—(PHStocks)—SM Prime Holdings Inc. (PSE: SMPH), the Philippines’ leading integrated property company, reported a 70% surge in its consolidated net income to PhP22.9 billion in the first nine months of 2015. This is inclusive of the PhP7.4 billion one-time trading gains on marketable securities booked in the first quarter of the year.
On a recurring basis, net income increased by 15% to PhP15.5 billion in the same period. Recurring income growth for the third quarter was likewise at PhP4.2 billion, up 15% over the third quarter in 2014.
Consolidated revenues rose 9% to PhP52.2 billion in the first nine months. In the third quarter, revenues likewise increased 13% to PhP16.2 billion, much higher than the 8% growth posted in the first half of 2015.
“SM Prime’s expansion across all its various business portfolios since 2013 has driven its strong financial performance this year. We expect SM Prime’s growth to be sustained as we continue to increase our mall footprint by 13% this year. We are excited to launch SM Seaside Cebu later this year, a landmark project in the Visayas region. We see Metro Cebu as one of our important growth corridors following our growth track in Metro Manila,” SM Prime President Hans T. Sy said.
Rental revenues from retail and commercial spaces, which contributed 56% to the consolidated revenues, increased by 11% to PhP29.4 billion from PhP26.4 billion in the first nine months of 2015. The growth in rental revenues was mainly driven by rising contribution from the new malls and the expansion of shopping spaces in existing malls in 2013 and 2014. These include SM Aura Premier, SM City BF Parañaque, Mega Fashion Hall in SM Megamall, SM City Cauayan, SM Center Angono and the expansion of SM City Bacolod with a total gross floor area of 652,000sqm. Rental growth also came from the opening of the Five E-com Center, with a GFA of almost 130,000sqm at Mall of Asia Complex with 97% of the space leased awarded. Meanwhile, same-store rental growth remained at 7%, maintaining the growth posted since 2012.
On the other hand, SM Prime’s real estate sales, which accounts for 32% of the consolidated revenues, grew by 4% to PhP16.6 billion from PhP 16.0 billion in the same period last year.
The improvement in real estate sales was largely attributed to the increase in the sales take-up and higher construction accomplishment of SMDC projects launched in 2010 to 2013 namely Jazz Residences in Makati City, Wind Residences in Tagaytay, Green Residences in Manila, Breeze Residences in Manila, Grace Residences in Taguig, Shore Residences in Pasay, and Trees Residences in Quezon City. For its part, SMDC alone posted a net income increase of 23% to PhP3.8 billion during the nine-month period from PhP3.1 billion.
Consolidated costs on real estate dropped by 1% to PhP9 billion mainly due to the improving cost efficiencies, tighter monitoring and control of construction costs. This reflected higher gross profit margin on real estate sales to 46% in first nine months 2015 from 43% in 2014. Net income margin likewise rose to 22% from 20% in the same period.
The housing group’s reservation sales was up by 19% year-on-year to 10,297 units in the first nine months of 2015 reflecting a 22% increase in value worth PhP28.4 billion from PhP23.3 billion in the same period last year. Reservation sales were largely generated from Shore 2 Residences, Shore Residences, Air Residences, Fame Residences and Grace Residences in Pasay, Makati, Mandaluyong and Taguig City, respectively.
Meanwhile, cinema and event ticket sales, which accounted for 6.5% of consolidated revenues, registered a growth of 4% in the first nine months to PhP3.4 billion.
Other revenues, composed of amusement income from rides, bowling and ice skating operations, merchandise sales from snack-bars and sale of food and beverages in hotels stood at PhP2.8 billion, up 30% from PhP2.1 billion.
In the first nine months of the 2015, SM Prime has a total of 52 malls in the Philippines including SM Megacenter Cabanatuan in Nueva Ecija and SM City San Mateo in Rizal which opened last April 24 and May 15, respectively. In China, SM Prime has six shopping malls with a GFA of 0.9 million sqm including the recently opened SM City Zibo. Taking into account both Philippine and China malls, SM Prime’s total retail space is at 7.6 million sqm.
SM Prime recently opened SM City Cabanatuan, with a GFA of 154,020sqm, and SM Center Sangandaan, with GFA of 38,622sqm, last October 9 and October 23, respectively. For the rest of the year, SM Prime is set to open its regional landmark, SM Seaside City Cebu, with a GFA of approximately 461,000sqm, on November 27, 2014. The company is also expanding two existing malls, SM City Lipa in Batangas and SM City Iloilo. Combined, these new and expanded malls will have a total GFA of almost 719,000sqm.
By the end of 2015, SM Prime will have 55 malls in the Philippines and six malls in China with an estimated combined GFA of 8.3 million sqm.
SM Prime currently has 27 residential projects in the market, 25 of which are in Metro Manila and two in Tagaytay. For 2015, SM Development Corporation will launch about 12,000 to 15,000 units in the cities of Taguig, Quezon, Mandaluyong, Tagaytay, Las Piñas, Parañaque and Pasay at the Mall of Asia Complex.
Meanwhile, the Commercial Properties Group has five office buildings with an estimated gross floor area of 318,000sqm. FiveE-comCenter will be formally launched this month. Currently, Three E-Com Center is under construction and scheduled for opening in 2018. For hotels and convention centers, Park Inn by Radisson Clark in Pampanga is expected to open in December 2015 while Conrad Manila in the Mall of Asia Complex in Pasay City is expected to open by first half of 2016.
SM Prime remains committed to its role as a catalyst for economic growth, delivering innovative and sustainable lifestyle cities, thereby enriching the quality of life of millions of people.