, February 25, 2005
 (STAR) By Zinnia B. Dela Peña  -  The Sy family, the majority owners of the country’s biggest shopping mall operator SM Group, is planning to build two more malls in China and is considering expanding in other emerging markets in Asia like Indonesia, Vietnam and India for continued growth.

SM Prime Holdings executive vice-president and SM Investments Corp. vice-chairman Henry Sy Jr. said two new malls are under construction in China, one in north Xiamen and the other in Shunde. He said the expansion will be undertaken by the Sy family themselves in partnership with local companies there.

"We are in joint venture with local companies there but the stores there carry the SM name. We don’t have that much landbank in China. If you bought a land there, you have to open it immediately. We can’t have a landbank," Sy said.

Sy said these two new malls will bring to four the total number of SM-owned shopping centers in China.

He added the company is looking at further expanding in Asia, preferably in emerging markets like Vietnam, Indonesia and India.

He, however, declined to say how much they will be allotting for their regional expansion.

SM Prime senior vice-president Jose T. Sio said the company is expected to post a 10 to 14 percent growth in profits in 2004 as it continued to benefit from increased consumer spending.

In 2003, SM Prime reported a net income of P4.2 billion, up eight percent from the previous year’s P3.86 billion. Revenues, on the other hand, are seen to increase by 15 to 16 percent due to higher rental revenues.

SM Prime registered consolidated revenues of P8.8 billion in 2003 or an increase of 10 percent from only P8.01 billion.

For the third quarter of last year, SM Prime reported a 11 percent growth in net income to P1.14 billion compared with only P1.08 billion the same period a year ago. This brought year-to-date net income to P3.37 billion or 10 percent higher than the year ago’s P3.07 billion.

Sio expects SM Prime to perform better this year with the opening of four new malls – SM Mall of Asia, SM City San Lazaro, SM City Molino, Cavite and SM Sta.Rosa.

This year, SM Prime has earmarked P5 billion for the construction of new malls and acquisition of real estate properties for future expansion.

SM Mall of Asia is envisioned as the country’s premier shopping destination and tourist attraction and the biggest shopping mall in the country. The first phase involves the development of main mall, an entertainment complex and two parking buildings with a gross floor area of 300,000 square meters. It is expected to be completed in the fourth quarter of 2005.

The Mall of Asia is located at the coastal edge of Manila in one of the six reclaimed islands along the coast of Manila Bay.

Sio said plans are now underway for the construction of a hotel which will form part of the second phase of construction at the Mall of Asia. The SM Group is looking for a strategic partner to manage the hotel which will be named SM Mall of Asia Hotel.

Meanwhile, Sy said his family will subscribe to San Miguel Corp.’s upcoming stock rights offering to protect its shareholdings in Southeast Asia’s largest food and beverage conglomerate. He said his family would need P1 billion to maintain its shareholdings in SMC. Funding, he said, will come from internally-generated cash.

When asked whether the company is interested in bidding for the government’s 41 percent stake in SMC, Sy said: "We’ll just maintain what we have right now, a director seat."

Reported by: Sol Jose Vanzi

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