SMIC confident in maintaining long-term consumption-led growth trajectory

SM Investments Corporation (SM Investments) remains confident in its long-term growth trajectory, driven by a resilient consumption-led economy, synergies across its business segments and strong consumer fundamentals.

In a recent report on Philippine conglomerates, equity research firm CLSA highlighted that SM’s retail segment is poised to benefit from minimum wage increases, sustained remittances and consumer spending resilience despite macroeconomic uncertainties.

Well-positioned

“The Philippine economy remains consumption-driven, and SM Investments is well-positioned to support and capture this demand. Our strong ecosystem — spanning retail, banking and property — enables us to navigate challenges while delivering long-term value,” said SM Investments president and chief executive officer Frederic C. DyBuncio.

CLSA noted that wage adjustments and higher remittances, aided by a weaker peso, are expected to support household spending, particularly in essential categories. While consumer spending patterns may evolve, CLSA maintains that overall consumption will remain a key economic driver.

“We would note SM Investments remains largely resilient and is worth a look given its valuation.”

Consumption-driven economy

“SM Investments is a beneficiary of a consumption-driven economy,” Joyce Anne Ramos, equity analyst at CLSA wrote in a recent report.

She added, “We anticipate spending behavior to continue to favor staples (essential items) over discretionary, with minimarts still driving growth.”

SM’s minimart chain Alfamart is expected to continue its expansion this year. From its first store in Trece Martires, Cavite in 2014, Alfamart has grown its footprint to 2,100 in the last 10 years mainly in Luzon and Metro Manila.

“We continue to see strong demand for essentials, with minimarts playing an essential role in serving everyday consumer needs,” DyBuncio added.

Beyond retail, CLSA underscored SM Investments’ synergies across its portfolio, highlighting

SM Prime’s record earnings and expanding mall network as well as BDO’s financial services as key growth drivers.

SM Prime’s widening presence

“We forecast that the retail segment will benefit from the widening presence of SM Prime, which in turn could boost BDO’s loan base and current account/savings account. Likewise, we expect the indispensable nature of the retail business’ products to increase foot traffic in malls and cater to upscale lifestyle,” CLSA wrote.

In 2024, SM Prime Holdings opened two malls in North Caloocan and J Mall in Mandaue City, Cebu. Currently, SM Prime has 87 malls in the Philippines with expansion geared towards the provinces to cover most of Northern Luzon, Visayas and the progressive cities in Mindanao.