By VG Cabuag
MALL operator SM Prime Holdings Inc. is still bullish on its investments in China despite the weakening of the world’s second-largest economy, and even expects to double its sales in that country in the coming years.
Hans T. Sy, SM Prime president, said despite the slowdown of the Chinese economy, China’s second- and third-tier cities, where SM Prime’s shopping malls are located, are still experiencing growth.
China reported a 6.8-percent growth in its GDP in the fourth quarter of 2015, the slowest in 25 years.
“China is a very, very big country. It’s almost as good as four countries, combined. The growth of China’s top-tier cities—Beijing and Shanghai—may be lower. This means the growth of the second- and third-tier cities is much higher,” Sy told reporters.
“There’s really no slowdown in our business. Even if we talk about our China mall, quite frankly, I’m still looking into doubling our growth [in terms of sales]. Of course, we may be affected a little because of the depreciation [of the yuan], but SM malls are not into financial business. We are very positive,” Sy said.
Sy was also referring to doubling the entire sales of the company at the end of its five-year plan that started in 2013 through 2018.
“When we did all the preparations for our five-year plan, we always do things that’s sustainable. Quite frankly, we’re very sustainable right now…we are continuously moving upward,” Sy said.
SM Prime earlier said it is allotting P20 billion a year to its Chinese operations through 2018 to bring its current portfolio of five malls to nine, while expanding to other sectors, such as into residential and office buildings.
Currently, the company’s malls in China include those in Xiamen, Jinjiang, Chengdu, Chongqing, Suzhou, Zibo and Tianjin, which the company still has to open.
The Tianjin mall will be the SM group’s largest mall in China, measuring about 540,000 square meters.
The company also plans to build a mall in Yangzhou City, while also going into residential business.
Sy, however, said it will do one residential business at a time, or the same pace of the mall development.
SM Prime’s Chinese malls, meanwhile, still contribute a small portion of SM Prime’s income.
The company’s six malls in operation only contributes some 900,000 sq m in gross floor area compared with the firm’s total retail space of 8.3 million sq m as of the end of the third quarter last year.
SM Prime reported a 70-percent surge in its consolidated net income to P22.9 billion in the first nine months of 2015, from the previous year’s P13.45 million.
This income, however, included a P7.4-billion one-time trading gain on marketable securities booked in the first quarter of the year.
On a recurring basis, net income increased by 15 percent to P15.5 billion.
Consolidated revenues rose 9 percent to P52.2 billion in the first nine months, from P47.79 billion.