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August 18, 2017

Property business boosts SMIC’s income in first half

NEWS
SM Investments Corp. (SMIC), the holding firm of the businesses of the Sy family, said its income grew 9 percent to P16.6 billion, from last year’s about P15 billion in profits. The property business contributed the most to SMIC’s consolidated net income at 42 percent, followed by banks with 36 percent and retail with 22 percent. Excluding one-time items in 2016, recurring income increased 16 percent in the first six months, the company said in a statement. Consolidated revenues rose 7 percent to P181.6 billion in the first half, from P169.7 billion last year. “Even without the benefits of an election year, we saw sustained growth across all our core businesses, driven by the strong economy and resilient consumer sentiment,” SMIC President Frederic DyBuncio said in a statement. “SM will continue to capture this momentum through nationwide expansion and by investing in high growth opportunities.” “Outside of the core businesses, SMIC continues to build its portfolio of investments in complementary businesses that will help capture the high growth of the Philippine economy,” SMIC’s disclosure said. Among its equity-investments portfolio, Belle Corp. benefited from increased growth in the tourism sector, reporting consolidated net income growth of almost double to P1.8 billion. SM Retail reported sustained growth in total sales of 6 percent to P131.6 billion, while net income rose 6 percent to P5.2 billion. SM Prime Holdings Inc., the unit that operates the shopping malls, reported consolidated net income of P14.4 billion, up 14 percent from the previous year.
(Source: Business Mirror, 09 August 2017)
 
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RESEARCH VIEW
SM is banking on the growing demand for worker-accommodation facilities in Metro Manila. Recently, it acquired a 61.2% share in Philippines Urban Living Solutions Inc. (PULS), the operator of a chain of dormitory buildings under the “MyTown” brand. Colliers recommends that developers look into worker accommodation projects that cater to the highly-mobile young urban professionals who can’t afford to own their own apartment yet or rent a condominium unit within the established business districts such as Makati, Fort Bonifacio, and Ortigas Center. These halfway residential units are for professionals who want to live near their place of work during weekdays but go home to their families‘ suburban areas during weekends. The worker-accommodation units are also more practical for employees working in CBDs as the worsening traffic in Metro Manila only makes their commute to and from work more unbearable. The continued expansion of BPOs and traditional firms in Metro Manila should result in increased employment opportunities in the country’s capital. This, in turn, should boost demand for more worker-accommodation facilities in Metro Manila.


Waterfront Philippines to revamp Cebu, Manila casino hotels

NEWS
Waterfront Philippines Inc is to implement renovation programmes covering four properties, including the firm’s three casino hotel schemes. The company plans to spend an aggregate of PHP1.65 billion (US$32.6 million) to modernise the four properties, it said in a Wednesday filing to the Philippine Stock Exchange. The revamp of the company’s Waterfront Cebu City Hotel and Casino (pictured) is forecast to cost PHP400 million. It is expected to start in early 2018. Waterfront Philippines additionally plans to implement a PHP450-million renovation programme at its Waterfront Airport Hotel and Casino Mactan, also in Cebu province. Works are forecast to begin in mid-2018. The firm’s Manila Pavilion Hotel and Casino is also earmarked to undergo renovation, with an estimated cost of PHP350 million, the company said.
(Source: GGRASIA.com, 09 August 2017)
 
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RESEARCH VIEW

Waterfront Philippines is renovating its Cebu hotels as the province remains a major tourist destination. Cebu is among the most visited sites in the country with around 4.1 million local and foreign tourists visiting the province in 2016. The figure is higher than the 3.3 million tourists recorded in 2015. We believe that infrastructure will play a crucial role in further boosting Cebu’s competitiveness as a tourist spot. Among the key infrastructure projects in the pipeline is the PHP17.5-billion Mactan-Cebu International Airport (MCIA) expansion project. The public-private partnership (PPP) project involves the construction of a new world-class passenger terminal building.  The new facility will have a capacity of 12.5 million tourists per annum, almost triple the old facility’s original capacity of 4.5 million. Cebu serves as the jump-off point to other Visayas and Mindanao destinations, hence the need to expand its airport’s capacity. Aside from the expansion of MCIA, we see Cebu attracting more tourists over the medium term given the completion of other key infrastructure projects that will considerably ease travel within the city and its environs. These projects include the Cebu-Cordova bridge and the proposed Bus Rapid Transit (BRT) system that is among the priorities of the Duterte administration. These major road transport projects should complement the rehabilitation and upgrading of national and local roads being undertaken by the Department of Public Works and Highways (DPWH) and support the Duterte administration’s “golden age of infrastructure” thrust.


Vista Land allocates P5b to build new shopping malls

NEWS
Vista Land & Lifescapes Inc. is spending nearly P5 billion over the next two years to build four new malls and expand an existing one as part of the strategy to build up recurring income, an executive said Wednesday. Vista Land investor relations head Bryan Edang said in an interview at the sidelines of the company’s P5-billion fixed-rate bond listing at Philippine Dealing & Exchange Corp. that the company planned to build Vista Malls in Marilao, Iloilo, Cagayan de Oro and Naga. The four new malls will add 116,000 square meters of leasable space to the group’s portfolio. The company will also expand Evia mall in Daanghari which will increase its leasable space to 100,000 sqm from the existing leasable area of 61,000 sqm. Vista Land said from 950,000 sqm of leasable space as of end-March 2017, it aimed to have 1 million sqm of total leasable space by end-2017 and 1.3 million sqm by end-2018. Funding for the construction of the new malls will come from the P5-billion bonds due 2024 and 2027. The bonds represent the first tranche of the company’s P10-billion bond shelf registration approved by the Securities and Exchange Commission. “We have successfully and continuously improved the profile of the company. We have transformed the company from being the largest homebuilder in the Philippines to be one of the country’s leading property developers with acquisition of Starmalls in 2015,” Vista Land chairman and founder Manuel Villar said. “We have now added a significant leasing components to our core residential development business. Our transformation puts into reality Vista Land’s expanded vision of creating multi-use communities that integrated residential and commercial developments,” he said.
(Source: Manila Standard, 09 August 2017)
 
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RESEARCH VIEW

Vista Land has been aggressive in building malls across the country as it banks on the Filipinos’ rising purchasing power. Aside from developing new malls in major hubs outside Manila such as Iloilo, Davao, Dasmariñas, and Bacoor, the firm has also been aggressive in developing its anchor establishments such as AllHome, AllDay Supermarket, AllToys, The Coffee Project and AllShop department store.  For the second quarter of the year, gross domestic product (GDP) per capita or the proxy for individual income, rose by 5% YoY. This should be sustained by continued flow of Overseas Filipino Workers' (OFW) remittances and sustained creation of BPO jobs ex-Metro Manila. Other key factors sustaining retail spending in the country are low inflation rate (average of 3.2% is within the central bank’s projection of 2% to 4%) and record-high consumer confidence which is attributed to growing employment opportunities brought about by expansion of business activities.


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Colliers International | Manila 11F Frabelle Business Center, 111 Rada Street Legaspi Village, Makati City 1229 Philippines | Tel: +632 888 9988