Tue, Jul 21, 2009 - Page 12 News List

FEATURE : Philippine billionaire looks to build malls in China

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Billionaire Henry Sy (施至成), whose retail empire has made him the richest man in the Philippines, may build as many as three malls a year in China to expand in the first major economy to rebound from the global recession.

“We have 34 malls in the Philippines and China is a market that’s 13 times bigger” by population, said Hans Sy (施漢生), president of SM Prime Holdings Inc, a unit of his father’s SM Investments Corp. SM Prime, the biggest Philippine mall operator, is spending 5.5 billion pesos (US$115 million) this year in China.

SM Investments, whose 61 percent share-price gain this year beats the Philippine benchmark, is increasing capital spending for this year by almost a third. Expanding in China may help open opportunities for the family’s other businesses, said Teresita Sy-Coson (施蒂絲), Henry Sy’s eldest child and vice-chairwoman at SM Investments.

“The malls will be an excellent outpost for the group,” said Alex Pomento, Philippine strategist at Macquarie Group Ltd. “They get a gauge of China’s consumer pulse and a springboard for the group’s other businesses.”

Henry Sy, 84, immigrated from China at the age of 12 and built the Philippines’ fourth-biggest listed company from a shoe store he started in 1948, amassing a net worth estimated by Forbes magazine at US$2.7 billion.

“China has a big consumer market, it will continue to evolve,” Henry Sy said in an interview on Saturday, which was also attended by Sy-Coson, Sio and Hans Sy.

“It has improved and can do things better than other countries,” said Sy, who started selling rice, sardines and soap at his father’s Manila store in 1936.

SM Investments gained 1.6 percent to 310 pesos at the noon close in Manila trading, while SM Prime rose 2.2 percent to 9.40 pesos.

SM Investments has outpaced the 38 percent gain of the benchmark Philippine Stock Exchange Index this year. Ayala Corp, holding company of the third-richest Philippine family and owner of the nation’s third-largest mall operator, has climbed 36 percent, advancing by 2.7 percent to 285 pesos yesterday.

SM Prime plans to open one mall annually in China starting next year and may accelerate that pace to as many as three yearly by 2013, Hans Sy said.

“There have been a lot of Chinese provincial officials who have visited the Philippines and they see what we are doing here and they want to replicate that,” Sy-Coson said. “Even now, there are invitations from provincial officials to go into their areas.”

SM Investments, whose assets include the biggest Philippine bank by assets and the Southeast Asian country’s largest supermarket and department store operators, forecasts profit will grow between 12 percent and 14 percent this year, chief financial officer Jose Sio said.

The company kept its target even after the Philippines cut the low end of its economic growth forecast from 3.1 percent to 0.8 percent, the weakest since 1998. Funds sent home by overseas Filipinos are sustaining consumer spending at SM-branded shops and malls, Sy-Coson said.

Remittances, which account for 10 percent of the Philippine economy, grew 2.8 percent to US$6.98 billion in the first five months from a year ago. The inflows reached a record US$16.4 billion last year, 11 times the country’s total net foreign direct investment.

About 20 percent of Philippine consumer spending passes through SM Investments’ malls and stores, and the company captures US$0.33 of every US dollar spent by families of Filipinos working abroad, Macquarie’s Pomento said.

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