November 05, 2013

SMPH’s 9M13 net income up 14% YoY

In a press statement, SM Prime (SMPH) today announced 9M13 net income of P8.43b, up 13.9% YoY on a 12% growth in consolidated revenues to P26.8b. EBITDA margins recovered QoQ to 66.5% in 3Q13 from 66% in 2Q13, and to 66.9% in 9M13 from 66.1% a year ago on lower film rentals, rent and other expenses.

Gross revenues from the five China malls grew at a faster clip (+14% YoY) to P2.17b on higher average rent alongside the renewal of lease agreements and steady occupancy rate. Overall same-mall sales growth was kept at a high 7% all throughout 9M13 and notwithstanding the higher 2012 base.

Our take: We believe the results are well within expectations with the 9M13 earnings accounting for 68% of the full-year consensus forecast. Malls sales normally hit its peak season in 4Q during which SMPH generate up to 30% of its overall sales and net income.

The 4Q results should also get a further boost from the commercial operations of the additional space in SM Megamall as well as the ramped-up operations of SM Aura. We also take note that the results (and the consensus forecasts) only take into account the existing operations of SM Prime and do not yet take into account the impact of its merger with SM Land Inc and the eventual infusion of more property assets from SM Investments. – WealthSec