Summary
Highlights
Paul S.M.I.C.'s Vice President for Communications and Planning, along with Mr. Frederick Boone Shaw, President and CEO, and Mr. Franklin Gomez, RSVP for Finance, opened the press conference. They invited questions from attendees. When asked about the first-quarter retail business performance, it was noted that the books were still closing, but an annualized growth exceeding the 7.3% growth in consolidated revenue from 2017 was anticipated. Full results would be disclosed on May 9th.
In response to concerns about potential cannibalization of home improvement stores with the entry of IKEA, SMIC stated this is still under discussion. The company is following government direction for priority projects, focusing on increasing economic growth nationwide and within the National Capital Region. They have invested in logistics to be part of this growth and also in office dormitories, anticipating continued demand for temporary residential housing for office workers. The focus is on areas with synergy for accelerating the group’s growth trajectory.
Regarding preparations for a potential 'retail Armageddon,' interpreted as the rise of e-commerce, SMIC acknowledges it's an early stage but inevitable development. They are actively exploring involvement in the e-commerce space through in-house initiatives and collaborations with market players like Lazada and Shopee, looking for opportunities in this sector.
The group's capital expenditure (CAPEX) for the year is estimated to be between 75 to 90 billion, with SM Prime taking the largest share (around 80 billion) and the remainder allocated to retail and banking. There are plans to improve the public float of China Bank, making it more attractive to investors. While there are no current plans to bring SM Retail to the public, steps were taken in 2014 to amend Articles of Incorporation to remove pre-emptive rights, allowing for future issuance of new shares to new shareholders.
The 1.7% drop in retail net income last year was attributed to a one-off accession that had to be settled. This was described as a timing difference, and the company expects to move past it and continue business growth. Regarding dealings with the Philippine Competition Commission, SMIC considers it a one-off event with no expected impact on their business, expansion, or growth plans moving forward. They will continue to look for relevant opportunities for the group.
SMIC has a new data arm that utilizes internal group data to improve services and products for customers, not for selling data. They are not interested in entering the FMCG business as it is more about customer relationships and tenancy in their malls. For the telecom industry, SMIC is hesitant to invest given the lack of understanding of the business and the significant capital requirements. They prefer to focus on businesses they are more familiar with, where they can leverage synergy with existing operations, such as logistics due to their nationwide footprint and retail breadth.
While dividend payout will always be considered, SMIC's subsidiaries are in growth mode, requiring investment. The company maintains a conservative approach to its balance sheet, funded by internally generated cash and external borrowings. This strategy ensures adequate funding by equity and allows them to maintain a conservative balance sheet, especially in a country with volatile economic history, to capitalize on opportunities in both good and bad times.