VizMin is the New Growth Corridor — SM

SM Investments Corporation (SM), one of the largest conglomerates in the Philippines, is committed to expand outside of Metro Manila where huge potential for growth is apparent.

In particular, Visayas and Mindanao contributed 26.9% to total Gross Domestic Product (GDP) in 2014 based on most recent data, growing at 5.6% and 7.4%, respectively. This compares well with Metro Manila’s growth of 5.9%. Population grew at an average rate of 1.9% in Mindanao, 1.4% in Visayas as GDP per capita increased by 2.4% in Visayas and 5.0% in Mindanao.

“VizMin is a new growth region for SM where significant opportunities await investors. Its underserved markets are hungry for the kind of aspirational products and services that SM tends to bring into its development,” Corazon P. Guidote, SM Senior Vice President for Investor Relations said.

SM has earmarked between PHP70 to PHP80 billion every year in an aggressive expansion bid in the Philippines, fueled by the local economy’s strong momentum. As a result of this capital commitment, SM further grew the bottomline by 11% to PHP15 billion in consolidated net income in the first half.

Since listing in the stock market in 2005, SM’s market capitalization grew by 19.8% per annum to PHP837.2 billion as of August 18, 2016 from PHP127.2 billion in 2005, reflecting the support from investors, particularly foreign institutional funds over the last 11 years.

SM Prime Holdings, SM’s property arm is spending the lion’s share of the capital as it further gears up for an aggressive expansion program in the next three years. This follows the opening of the 430,000 sqm SM Seaside Cebu in 2015, the company’s largest mall in Southern Philippines. The mall sits on  on SM’s flagship 30-hectare property designed to be a lifestyle city complex in Cebu’s SRP.

SM opened its first mall in the Visayas in 1993 with SM City Cebu which has been expanded given its highly successful run. Beside it stands the 396-room Radisson Blu which opened in October 2010. SM City Consolacion opened in Cebu in 2012 and SM Seaside City Cebu in 2015. Including the above-mentioned malls, SM Prime has a total of five malls in Visayas including SM City Iloilo and SM City Bacolod with a combined gross floor area of over 1 million square meters. In Mindanao, SM Prime has four malls—SM City Davao and SM Lanang Premier also in Davao, SM City Cagayan de Oro and SM City General Santos with a combined GFA of over 490,000 sqm.

“Mr. Sy is one of the prime movers in the South. He goes to places where few investors go and develops catalyst projects that eventually bring in other businesses into the area. This reinforces SM’s vision and creates a positive impact on the lives of its host communities. The market is ready and SM is ready to take on a more aggressive stance outside of its comfort zone,” Ms. Guidote said.

On the SM Seaside Complex will soon open a one-hectare Cebu Ocean Park which will be the first world-class marine theme park facility in the South. It is set to take SM shoppers on an educational, interactive, exciting and fun-filled marine life journey for kids and through its four main park attractions: the Oceanarium that will feature an acrylic enclosure allowing for a 360 degree view of the main lagoon, Stingray and Crocodile Encounters, Sea Lion and Bird Shows, and Jellies and Penguin Exhibits. Convention rooms will also be developed for tourism and education related facilities.

As the anchor development, SM Seaside City is slated to transform the city’s landscape into a business tourism and entertainment destination as SM Prime adds offices, an arena, a five-star hotel, convention centers and residences. Apart from malls, SM Prime also has hotels in the VizMin region, namely Radisson Blu hotel in Cebu and Park Inn in Davao. It also has convention centers, namely SMX Bacolod, SMX Davao and the Cebu Trade Hall.

In retail, SM’s department store business under SM STORE recently opened in Cebu’s SM Seaside City which is aligned with the mall’s accelerated growth in the provincial territories. Mr. Henry Sy in fact opened a shoe store in Cebu as early as 1965 and his first Shoemart department store in the Visayas, partcularly in Iloilo in 1979.   Today there are six department stores operating in Visayas particularly in Cebu, Mandurriao, Delgado in Iloilo, Bacolod, Consolacion in Cebu and Cebu SRP and four in Mindanao particularly Davao, Cagayan de Oro, General Santos, and Lanang in Davao.

SM Markets, SM’s food retail arm which consists of the brands SM Supermarket, SM Hypermarket and Savemore, continued to aggressively expand in both urban and rural communities in various parts of Luzon, Visayas and Mindanao.  SM Markets today follows a multi-format growth strategy to address the lack of organized retail in many parts of the country, largely diversifying from its previous strategy of operating anchor stores in malls.  In Visayas and Mindanao, SM Markets has a total of 42 stores.

In banking, BDO Unibank, the country’s largest bank acquired One Network Bank (ONB), the largest rural bank in Mindanao. The acquisition of ONB expands the regional presence of BDO  particularly in its target market in the southern Philippines’ consumer base and opens up business lines for the bank.  BDO Unibank has a total of 182 branches in Visayas and Mindanao and over 100 branches under One Network Bank in the region. On the other hand, China Banking Corp. has 87 branches in VizMin and 16 branches under China Bank Savings in the region.

“Overall, SM continues to be a long-term growth story. It aims to further create value for all its shareholders by tapping on the huge potential that the Philippines offers to those committed to the welfare of its people and the country’s development,” Ms. Guidote said.