Geopolitics not SM group’s worry

Tensions between China and the Philippines in the West Philippine Sea are not affecting the SM Investment Corp. (SMIC) empire, particularly in its retail business since some of its malls are located in China.

SM has eight malls in China against 85 in the Philippines.

“Our strategy is not deeply affected or in any way disturbed by geopolitics. It is a risk we look at as a way of risk management, but our strategy in terms of expansion and the core strategy of our businesses are not impacted by that at all,” SMIC corporate information officer and senior vice president for finance Franklin Gomez told members of the media during the company’s 2024 stockholders meeting on Wednesday.

Earlier this month, President Ferdinand “Bongbong” Marcos Jr. said he was hoping that Chinese aggression in the West Philippine Sea would now be avoided following the successful naval exercises among the Philippines, United States, Japan and Australia.

Meanwhile, SMIC earlier announced that it plans to shell out P110 billion to P115 billion this year for its capital expenditures, in which the biggest driver of spending would be its property unit, SM Prime Holdings Inc. (SMPHI).

Bullish for investments

The conglomerate’s mall operation, SM Malls, also disclosed that a P100-billion capex for 2024 will be released to finance expansion plans, namely the construction of four more malls.

To diversify the group’s sources of funding, Gomez said SM Malls and SMPHI companies are set to tap the overseas market for a $3-billion Euro Medium Term Note (EMTN) program, deemed as the largest issuance by a Philippine company.

“We have seen a strong 2023. Despite the headwinds along the way and the uncertainty in geopolitics, the country’s macroeconomy remains intact. There should not be significant changes along the way when it comes to the growth trajectory for this year. But of course, we can never expect a smooth run. But we cannot say about our growth in the first quarter, as we will be releasing that in two weeks,” Gomez explained.

He said one of the hindrances that the company considers is the fluctuating inflation, which is still squeezing consumers’ wallets.

“The world is quite uncertain. We are investing in our businesses like our portfolio companies that have significant room for growth, and what is sure is that we will sustain the momentum as the country has so much room to grow. The provincial areas are growing faster than NCR, and we are directing a lot of our investments in the provincial areas. Hopefully, as the economic activity will pick up, then we will be able to benefit from that,” according to Gomez.

SM Investments Corp. is one of the leading Philippine companies that is invested in market-leading businesses in retail, banking, and property. It also invests in ventures that capture high growth opportunities in the emerging Philippine economy.

SM’s retail operations are the country’s largest and most diversified, consisting of grocery stores, department stores, and specialty retail stores.

SMPHI is the largest integrated property developer in the Philippines with interests in malls, residences, offices, hotels, and convention centers as well as tourism-related property developments.

SM’s interests in banking are in BDO Unibank Inc., the country’s largest bank, and China Banking Corporation, the fourth-largest private domestic bank.