SMIC sees higher share of portfolio earnings

Philippine Tribune
Philippine Tribune

Iris Gonzales – The Philippine Star

October 5, 2023 | 12:00am

MANILA, Philippines — SM Investments Corp. (SMIC), the listed conglomerate of the Sy Group, is targeting to boost the earnings contributions of its investments portfolio to at least 15 percent from 10 percent.

SMIC’s portfolio investments contributed 10 percent to total net earnings as of the first half of the year.

The goal is to continue building the momentum of the investments portfolio and increase its share in earnings growth, said SMIC consultant for investor relations and sustainability Timothy Daniels.

“We think we can get this to the mid-teens in percentage contribution over the medium term,” he said in a talk at the recently concluded Philippine Stock Exchange Investor Day.

He said the group is particularly optimistic on the potential contributions of SMIC’s logistics and geothermal ventures to drive faster growth.

SMIC has been growing its investment portfolio and in recent years has bet big on energy and logistics.

“The investments we made in Philippine Geothermal Production Company (PGPC) and in logistics with 2GO and Airspeed, have performed well,” Daniels said.

Last year, SMIC raised its stake in PGPC, which operates the Tiwi and Mak-Ban steam fields in Albay and Laguna and Batangas.

This was done through the issuance of 17.4 million shares at P903.88 per piece P15.7 billion to PGPC’s controlling shareholder, Allfirst Equity Holdings, in exchange for an 81 percent stake in the renewable energy company.

This brought SMIC’s stake in PGPC to 100 percent from 19 percent at present.

Tiwi, in Albay, is the first commercial-scale geothermal steam field development in Southeast Asia, followed by Mak-Ban in Laguna and Batangas, both in operation since 1979.

Together, they generate geothermal steam sufficient to produce approximately 300 MW of electricity.

The acquisition is part of SMIC’s efforts to meet its sustainability goals such as a major shift to renewable energy.

Increasing geothermal energy production through PGPC fits with SM’s objectives when it comes to its sustainability agenda, Daniels said.

In 2021, meanwhile, SMIC raised its stake in 2GO after acquiring shares from Dennis Uy’s Chelsea Logistics Corp. and Infrastructure Holdings.

The transaction resulted in the increase of SMIC’s shareholding in 2GO to 52.85 percent from around 30.53.

In 2022, 2GO posted profits of P312 million on the back of a 25 percent growth on revenues of P19.3 billion. This was from an attributable net loss of P1.14 billion in 2021.

2GO’s revenues grew as the company benefitted from the country’s economic reopening and complete lifting of movement restrictions.

“We are picking the businesses that add to the ecosystem of SM Investments. It’s about creating value and growth,” Daniels said.

SM is into retail through it’s different food, non-food, and specialty retail stores; retail through SM’s property arm, SM Prime Holdings Inc.; banking through BDO Unibank Inc., the country’s largest bank, and China Banking Corp., the fourth largest bank by total assets among private banks.

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