SMIC is the Philippines’ most valuable company, with a market capitalization of P1.002 trillion. The second most valuable is also Sy company, SM Prime, P879 billion; and the third is still another Sy company, BDO Unibank, P735 billion. The fourth most valuable is the Ayala-owned Bank of PI, with P523 billion in market cap.
By Antonio S. Lopez
That is the number of retailing and happiness palaces the Philippines’ most valuable conglomerate promises to have here in three years or by its 68th year.
SM was founded by the legendary taipan Henry Sy Sr. in 1958 as a ramshackle variety and shoe store from the ruins of war in Carriedo, Manila.
Tatang’s dream: If he could sell a pair of shoes to every customer who walks into his store and make as little as one peso on each pair, it would be a good deal. The Sy family remains the Philippines’ richest, with a net worth of easily $8 billion.
On Sept. 4, 2023, Tatang’s heirs led by Tessie Sy-Coson and Hans Sy gathered some 1,000 SM partner tenants at the cavernous SMX Convention Center for a three-hour summit over coffee, juice, and bits of sandwiches to kick off the celebration of its 65th year.
SM imported two speakers, Emma Chiu and Malcolm Gladwell.
The global director of Wunderman Thompson Intelligence, a “futures and innovation think tank”, Emma told SM partners how good the times are – and the future — despite the no-end Russia-Ukraine war; tension in East Asia; runaway inflation in many countries, including the Philippines; feared recession or economic slowdown in major countries like the US, Germany, United Kingdom, France, Canada, Italy, and even China; and shortages and high prices of strategic commodities like food, fuel, and fertilizer. Listening to Emma, one gets the feeling the business of SM is not retailing shoes, foods, or dry goods but happiness, what she calls “joyconomics”.
“We are going through this era of transformation where we want to take charge and take things into our own hands and create and empower change,” Emma said.
Positivity
“What makes the future something worth pursuing? It is this sense of positivity. We want to project a future and create a future that is optimistic: 70% of people say they feel optimistic about the future. And 75% of American Gen Zs, the younger generation, say that they are the generation to be creating change in the world.”
Best-selling author and Canadian journalist Gladwell cited authenticity, inclusivity, and spontaneity as the three keys to a successful campaign or branding exercise for today’s youthful market. The market today, he pointed out, isn’t governed by hierarchy but by a network.
Actually, Tessie and Hans Sy, both directors of the family holding company SMIC, did not need to plane in blue chip foreign speakers to tell SM’s partner tenants and their 4.2 million daily visitors to SM malls how good the times are.
Times are good
Times are good. And it’s because the SM group has got it all, thanks to Henry’s hard work.
SMIC is the Philippines’ most valuable company, with a market capitalization of P1.002 trillion. The second most valuable is also Sy company, SM Prime, P879 billion; and the third is still another Sy company, BDO Unibank, P735 billion. The fourth most valuable is the Ayala-owned Bank of PI, with P523 billion in market cap.
In the first half of 2023, “SM delivered strong results, driven by solid consumer sentiment on the back of a positive economic environment. Our performance was driven by fundamental demand, without the added benefit of post-pandemic ‘revenge spending’ that contributed to last year’s results. We experienced robust consumer confidence, consistent with the Philippines’ overall economic growth, record low unemployment, and improving inflation environment. This provides us with a solid basis for the balance of the year, in which we typically see our strongest quarters,” reported SMIC President and CEO Frederic C. Dybuncio in a disclosure.
First half revenues up 18%
Revenues rose 18% to P286.3 billion, earnings swelled 32% to P36.5 billion, and assets spiked 2% to P1.5 trillion. Retail revenues were driven by strong consumer demand, especially in discretionary.
SM Retail, in particular, netted P8.4 billion in the first half, up 21%, on 15% higher revenues, at P188.9 billion.
As of June 30, 2023, SM today has 83 malls in the Philippines and 8 in China. Under them are 3,677 stores (with a total selling area of 3.29 million sqm), up 10% or 341 stores. Retail stores consisting of SM Stores (P48.2 billion in first half revenues, up 27%); Food, P110.3 billion in revenues, up 10%; and Specialty Shops (health, fashion, kids, and home), P42.7 billion in revenues, up 18%.
Boosted by economic activities at the malls and P3.29 trillion in deposits, the group’s flagship bank, BDO, makes P5.9 billion in profits—every month. What other big banks make in a year, BDO does it in just 30 days.
Steven Tan, the president of the SM Supermalls calls its retailing powerhouses “vibrant centers of community”. “You are the heartbeat of our malls, bringing life to our spaces, and giving us variety. and sowing us a resilient spirit of entrepreneurship,” he told some 1,000 tenants gathered at SMX.
Steven painted “an even more dynamic future in our shared path, with prospects that range from experience-driven malling, and enhancements in digital technology to sustainable initiatives that will elevate SM Supermalls to new heights.”
New malls include SM City San Pedro and SM City Santo Tomas year’s end. Malls are planned in Laoag, La Union, Santa Rosa Nuvali, plus a transformed Harrison Mall in Manila. SM Mall of Asia, SM City Cebu, SM Aura Premier, and SM Megamall (20,000 sqm of new retail space) are undergoing high-profile expansions. SM Mall of Asia will complete its expansion in 2024. SM Aura Premier will have refreshed aesthetics.
The two Cebu SM Malls are expanding too, with a new National University and a second SM Arena. (See page 40, SM Prime story)
“Together, let us shape the retail landscape, reimagine and revolutionize malling experiences, and create a legacy that goes beyond these walls,” Steven urged the partners.