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SM Prime
Holdings Inc. (SMPH), the shopping mall development arm
of the Sy group, is spending P1 billion for the
construction of its fourth mall in China later this
year.
At the
sidelines of the company’s annual stockholders meeting
Thursday, president Hans T. Sy said the investment is on
top of this year’s P6-billion capital spending for local
expansion.
The mall
will be located in
Chongqing,
southwest China’s commercial capital.
“The
mall will have a gross floor area of 140,000 square
meters and is up for completion by 2010,” Sy said.
SMPH has
three existing malls in the southern and western parts
of China, namely, Xiamen, Jinjiang and Chengdu. The mall
in Xiamen was the first to open in December 2001. It has
a gross floor area (GFA) of 128,000 square meters (sq
m), almost similar in size to SM City Santa Mesa and is
100-percent occupied. SM Jinjiang opened in November
2005 with a GFA of 170,000 sq m and occupancy of 74
percent. Opened last year was SM Chengdu with a GFA of
170,000 sq m and a 71-percent occupancy rate.
“China
is still a relatively new area for us and we will remain
conservative in our approach when it comes to investing
there,” Sy said.
In the
next five years, SMPH plans to build three to four
additional malls in China as part of its long-term
growth strategy.
For his
part, executive vice president and chief finance officer
Jeffrey Lim said it would still be the local operations
that will carry the growth for SMPH.
“While
the three existing malls in China are all profitable, we
expect them to only contribute 3 percent to our revenues
this year and probably around 10 percent in the next 10
years given their small size compared with the local
malls. But the potential for growth is huge,” Lim
explained.
SMPH,
whose shares are listed on the stock exchange, acquired
last year the China-based malls owned by the Sy family
for P10.8 billion. The purchase was done via a share
swap deal where SMPH issued 913 million new shares to
the Sy family, valued at around P11.86 per share.
SMPH
reported a net income of P5.97 billion in 2007 and said
the acquisition will allow them to gain a foothold in
China’s fast-growing economy and use this as a platform
for long-term growth outside of the Philippines, where
it is already the most dominant player.
“These
are similar in demographics to the existing three malls
and, in a way, to the Philippines. Management believes
that the growth in these areas will be strong given the
expansion of the middle-income sector and rising
consumer spending,” it said earlier. |
