SM PRIME Holdings, Inc. (SM Prime) on Monday, May 7, said its overall net income in the first quarter of 2018 increased by 15 percent to P7.6 billion as it opened more malls and the value of its residential businesses in key cities across the country increased.
The company said its consolidated revenues reached P23.4 billion in the first three months of the year, higher by 14 percent from the reported P20.5 billion in the same period of the prior year.
SM Prime’s overall operating income for the first three months improved by 16 percent to P11.1 billion from P9.6 billion in the same period under review.
“The growing revenue contribution of our mall operations in the provinces and increasing reservation sales of our residential projects in Metro Manila drove our bottom line higher and kept us in line with our first quarter target in 2018. Nevertheless, we plan to continue expanding in key cities all over the Philippines to sustain our growth targets over the next few years,” said SM Prime president Jeffrey Lim.
Growing share from provincial malls
For the first quarter of 2018, SM Prime registered a 10 percent revenue growth in its malls business to P13.9 billion from P12.7 billion. This accounts for 59 percent of the consolidated revenues of the company. The new malls that opened in 2016 and 2017 helped improve the company’s mall rental revenues, delivering P11.9 billion, 12 percent higher from last year’s P10.7 billion.
These malls include SM City San Jose Del Monte in Bulacan, SM City Trece Martires in Cavite, SM Cherry Congressional in Quezon City, SM City East Ortigas in Pasig City , SM CDO Downtown Premier in Cagayan de Oro, S Maison in Pasay City, SM Cherry Antipolo in Rizal, SM City Puerto Princesa in Palawan, SM Center Tuguegarao Downtown in Cagayan, SM Center Pulilan in Bulacan and SM Center Lemery in Batangas.
SM Prime’s malls operating income increased by 11 percent to P7.8 billion from P7 billion, while operating margin was steady at 56 percent. The company also maintained its 7-percent same-mall-sales growth for the first three months of the year.
Meanwhile, cinema and event ticket sales declined by 9 percent to P1.117 billion from P1.230 billion. This is due to less than stellar international blockbuster movies shown compared to 2017.
On the other hand, other revenues includes amusement, bowling, ice-skating and merchandise sales increased by 7 percent to P819 million from P763 million. The revenue growth is attributed to higher income from amusement rides, improvements in bowling and ice-skating operations and commissions from sale of event tickets.
The company’s dynamic expansion in the provinces showed growing contribution to the total revenue of its Philippine mall business from 46 percent in year-end 2014 to 52 percent in the first quarter of 2018.
This year, SM Prime’s mall launches will all be in the provinces. These include the two recently opened malls namely SM Center Imus in Cavite and SM City Urdaneta Central in Pangasinan. Also opening this year are SM City Telabastagan in Pampanga, SM City Legazpi in Albay and SM Center Ormoc in Leyte.
Increasing value of residential projects
SM Prime’s residential group, led by SM Development Corporation (SMDC), posted revenue growth of 25 percent in the first quarter of 2018 to P7.5 billion from P6 billion in the same period last year. This accounts for 32 percent of the consolidated revenues of the company. The group’s operating income also surged by 43 percent to P2.4 billion from P1.7 billion.
SM Prime enjoys double-digit growth in residential real estate sales due to more projects being turned over from 2015 to 2017. These include Shore 2 Residences and S Residences in Pasay City, Fame Residences in Mandaluyong City, South Residences in Las Piñas City, and Spring Residences in Parañaque City.
Sales of Ready-for-Occupancy (RFO) projects continue to also increase due to strong demand fueled by Overseas Filipino Workers’ families, international buyers and rising disposable income of the emerging middle class.
The growth in the first quarter of 2018 brought the residential group’s consolidated costs of real estate to P3.7 billion, 20 percent higher from last year’s P3.1 billion. Gross profit margin improved to 49 percent from 48 percent and net income margin to 24 percent from 23 percent.
SMDC’s reservation sales grew by 20 percent in terms of sales value to P14.8 billion in the first quarter of 2018 from P12.3 billion in the same period last year. In terms of unit sales, it was almost flat at 3,894. Projects such as Bloom Residences in Parañaque City, Fame Residences in Mandaluyong City, Grass Residences in Quezon City, Shore 3 Residences in Pasay City and Red Residences in Makati City topped this quarter’s sales report.
SM Prime is in line with its target to launch 12,000 to 15,000 residential units this year. These will be spread across the company’s high-rise-building, mid-rise-building and single-detached house and lot projects.
SM Prime’s other businesses registered a consolidated revenue growth of 8 percent in the first quarter of the year to P2 billion from P1.9 billion in the same period last year. Revenues from Commercial Properties Group and Hotels and Convention Centers covered 9 percent of the overall consolidated revenues of the company. Operating income increased by 1 percent in the first three months of the year to P929 million from P922 million in the same period last year.
The Commercial Properties and the Hotels and Convention Centers businesses reported a revenue growth of 9 percent and 6 percent, respectively, in the first quarter of 2018.
To date, SM Prime’s Commercial Properties Group has a combined GFA of 464,000 sqm. The company is set to launch ThreeE-Com this year, its third office building in the Mall of Asia Complex with almost 130,000 sqm of gross floor area. The Hotels and Convention Centers business has six hotels with over 1,500 rooms, four convention centers and three trade halls. The group is set to expand Park Inn – Clark in Pampanga this year. (PR)