4 weeks ago
10
Merkado Barkada
February 20, 2025 | 8:10am
SM Prime [SMPH 23.15, up 1.3%] [link] teased its FY24 full-year results, including a record annual profit of P45.6 billion driven by “higher contributions from all of its business segments”. Consolidated revenues were up 10%, driven by “higher rental income, real estate sales, and revenues from services and experiential offerings.” SMPH reported that malls accounted for 55% of its revenue, “residences” account for 34%, hotels and convention centers for 6%, and offices and warehouses for 5%. SMPH said that its Q4 results were the best quarterly earnings it has ever seen, achieving both all-time highs in revenues (P40.6 billion, up 14%) and net income (P11.8 billion, up 19%).
MB bottom-line: This is a big part of why we aren’t going to see that SMPH REIT anytime soon. This group is just printing money. They’re flush with cash. They don’t need to sell a huge chunk of their income stream to raise money to fund expansion; they’re making enough money to do that on their own. They’ll always have the ability to whip a REIT (or two) out to solve any funding shortfalls in the future if needed, but why jump through all those hoops and lightly handcuff your use of REIT sale proceeds if you simply don’t need to?
One thing that jumped out at me was the line at the top of the press release, where SMPH referred to itself as “one of the leading integrated property developers in Southeast Asia”. This is a line that they’ve been using for a while now, but I didn’t notice it until now. That’s a type of branding that is usually reserved for companies that are looking to step out of their “home country” to play with the big boys at the regional level. Jollibee [JFC 252.20 ?1.9%] comes to mind. Here, SMPH’s only real non-PH activity is in China, and even then, it’s basically restricted to building malls. To the best of my knowledge, none of its other business segments have any exposure to China, and none of its segments have exposure to countries in SE Asia that aren’t China or the Philippines. I wonder if we’ll start to see that change as the group runs out of high-ROI map to saturate.
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