1H2010 SMIC Media and Analyst Briefing Pres-Final 5...

8/5/2010

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SM Investments Corporation1st Half 2010 Media and Analyst Briefing05 August 2010

Retail Malls Banking Property

SM Retail, Inc. SM Prime Holdings, Inc.

BDO

China Bank

SM Land, Inc.

SM Department Stores (85%)1

SM Supermarkets(100%)

SM Hypermarkets(100%)

Makro(100%)

SM Development Corp. (44%)

Commercial Properties Group (67%)

Costa del Hamilo

SM Hotels and

Convention

(100%) (51%) (41%)

(20%)

(67%)

(94%)

(100%)

SM at a Glance

Hotels and Convention

1 includes SM Mart

2 SMIC1H2010 Media and Analyst Briefing | 05 August 2010

Highlands Prime

(31%)

Directly

owned by SM

Directly

owned by SM

Listed at the Phil.

Stock Exchange

Listed at the Phil.

Stock Exchange

SM’s effective

ownership

SM’s effective

ownership

(#)%(#)%

Profitable Operation

1H2010 growth of 15% is ahead of budgeted growth of 12%

Banks, retail and property contributed to strong growth

1H’10 1H’09 % Chg

Revenues (Php bn) 85.0 74.0 15%

Gross Profit (Php bn) 15.2 13.1 16%

Net Income (Php bn) 8.5 7.4 15%

1st Half EPS (Php) 14.0 12.1 16%

P/E Ratio (x)* 15.1 17.2 21%

Return on Equity (%)** 13.8% 13.7% --

Interest Cover (x) 4.7 7.9 -41%

EBITDA (Php bn) 18.4 15.9 16%

EBITDA Margin (%) 21.6% 21.5% --

Net Margin (%) 10.0% 10.0% --


* Based on Php450 – market price as of Aug. 3 2010 a nd annualized EPS. ** Based on annualized earnings

Strong Financial Position

Prudent financial management

Greater focus on longer tenor borrowings

Net debt of only 30.6% of Equity

Assets up 12% to Php347 bn

Book value up 12% to Php211/sh

(In Php billion) 1H’10 1H’09 % Chg

Total Assets 347.1 309.8 12%

Current Assets 71.7 76.6 -6%

Non-Current Assets 275.4 233.1 18%

Current Liabilities 37.1 46.7 - 21%

Long-term Liabilities 137.4 108.1 27%

Total Liabilities 174.5 154.8 13%

Stockholders Equity 172.6 154.9 11%

Book Value/Sh 210.7 188.1 12%

Current Ratio 1.93 : 1 1.64 : 1 --

Debt/Assets Ratio 34.3% 33.0% --

Debt/Equity Ratio 48 : 52 47 : 53 --

Net Debt (Php bn) 52.8 42.3 25%

Net Debt to Equity (%) 41.0% 36.8% --


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Retail Operations


Overall Retail ResultsMargin improvement across all store formats due to greater economies of scale, cost reduction measures, and increased stock turnoverFaster roll out of Save More storesImproved merchandise and upgraded store layout for department stores

(In Php billion) 1st Half 2010

1st Half 2009 % Chg

Sales (Php bn) 63.4 56.4 12%

Net Income (Php bn) 2.8 2.2 25%

Net Margins 4.4% 3.9% --

ROE 37%* 34% --

Total No. of Stores 125 103 21%


* Based on annualized earnings

Overview of Retail Operations

SM Department Stores SM Supermarkets SM Hypermarkets Makro

First half 201037 stores


First half 201031 SaveMore27 Super-markets

First half 200917 SaveMore25 Super-markets

First half 201020 Hyper-markets

First half 200915 Hyper-markets



Positioned to benefit from an economic resurgence a nd improved consumer confidenceExpansion of non-food business will be in tandem wi th SM mallsExpansion of food business also in tandem with SM m alls, complemented by the faster roll out of Save More storesAll Makro stores to be converted into SM Hypermarke ts


Mall Operations


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Financial Highlights

SMIC1H2010 Media and Analyst Briefing | 05 August 2010

1H’10 1H’09 % Chg

Revenues (Php bn) 11.3 9.6 17%

Operating Expenses 5.3 4.5 18%

Income From Operations 6.0 5.1 17%

Other Income / (Expense) -0.9 -0.6 52%

Income Before Tax and Minority Interest 5.1 4.5 12%

Minority Interest 0.14 0.12 19%

Net Income After Tax 3.8 3.4 10%

EBITDA (Php bn) 7.7 6.6 17%

Operating margin 53% 53% ---

EBITDA margin 68% 69% ---

Net margin 33% 35% ---

Return on Equity 16%* 15% ---

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*Based on annualized earnings

Better economy underpinned the strong growth of SM malls in the first half of 2010

Total revenues up 17% as rental income 13% and cinema ticket sales grew 47%

Net income up 10%

Same store sales up 6%

New malls in 2009 added 340,000 sqm. These include SM City Naga, SM City Rosario, and SM Center Las Piñas. Additional space came from expansions in SM North Edsa, SM City Fairview, and SM City Rosales

SM City Tarlac opened in April 2010.

Average occupancy of all malls: 94%

Mall Trivia:Mall Trivia:37 SM malls with a GFA of 4.6 million sqm. and home to 13,066 tenants; 37 SM malls with a GFA of 4.6 million sqm. and home to 13,066 tenants;

Has over 200 cinemas with 133,224 seats. Average fo ot traffic of over 2.5 mn per day or. 900 mn p.a.Has over 200 cinemas with 133,224 seats. Average fo ot traffic of over 2.5 mn per day or. 900 mn p.a.

SM Supermalls in the PhilippinesSM Supermalls in the Philippines


2010 SM Malls: 234,228 SQM.2010 SM Malls: 234,228 SQM.

SM SM CalambaCalamba: 41,394 : 41,394 sqmsqmTo open on October 2010To open on October 2010

SM SM NovalichesNovaliches: 55,085 : 55,085 sqmsqmTo open on October 2010To open on October 2010

SM San Pablo: 34,409 SM San Pablo: 34,409 sqmsqmTo open on September 2010To open on September 2010


NO

W O

PE

NN

OW

OP

EN

SM

S

M T

arla

cTa

rlac:

: 10

3,34

0 10

3,34

0 sq

msq

m

SM China

(In Php million) 1H’10 1H’09 % Chg

Revenues 615 490 25%

Operating Expenses 393 373 5%

Income from Operations 222 118 88%

Other Income (charges) -74 -28 162%

Net Income after Tax 104 60 75%

EBITDA (Php bn) 419 279 50%

Operating margin 36% 24% --

EBITDA margin 68% 57% --

Net margin 17% 12% --

SM Prime’s emerging business in China translates to strong growth both in revenues and net income.

The growth is due to improvements in the average occupancy rate, lease renewals, and the opening of the SM Xiamen Lifestyle Center, which added 110,000 sqm of GFA to the Xiamen mall, for a total GFA of 0.6 million sqm.

The average occupancy rate for the three malls in China is now at 87%


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SM China Malls: Total GFA of 577,141 sqm.

SM City Xiamen and Lifestyle Center: 238,150 SM City Xiamen and Lifestyle Center: 238,150 sqmsqm

SM Chengdu: 169,407 SM Chengdu: 169,407 sqmsqmSM JinSM Jin--Jiang: 169,584 Jiang: 169,584 sqmsqm


SM China Expansion


SM Suzhou: GFA of 70,000 sqmTo open on 4 th Q 2010

Profile: City of SuzhouLocation - Jiangsu Province Population - 6.3 millionIndustries - Electronics, IT, Bio-technology,

Textiles, Export Processing Zones, Industrial Parks

Banking

15 | SMIC 1H2010 Media and Analyst Briefing | 05 Au gust 2010

BDO Unibank


Financial Highlights1H’10

(Php bn)1H’09

(Php bn)%

Chg

Net Interest Income 16.7 14.3 17%

Other Income 8.5 7.1 20%

Net Income 4.1 2.1 94%

Assets 873.1 790.0 11%

Capital 83.0 61.5 35%

Deposits 693.3 627.1 11%

Gross Customer Loans 491.5 414.4 19%

ROE (%) 11.1% 7.2%

Net Interest Margin (%) 4.3% 4.0%

CAR (%) 14.3% 12.8%

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China Bank


Financial Highlights1H’10

(Php bn)1H’09

(Php bn)%

Chg

Net Interest Income 4.2 3.9 8%

Other Income 1.7 1.8 -7%

Net Income* 2.1 2.0 9%

Assets 232.6 208.6 12%

Capital* 28.7 26.0 10%

Deposits 192.0 174.1 10%

Loans ** 103.65 93.1 11%

ROE (%) 14.7% 15.5%

NPL (%) 4.4% 4.9%

CAR (%) 13.9% 12.9%

* Attributable to equity holders of the parent; ** Gross customer loans, NPL(%) based on BSP formula, NPA (%) NPA/Total Assets NIM -defined as Net Interest Margin

Property Development


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SM Land Inc.

Residential Commercial Leisure

Highlands Prime

Mall of Asia Complex

BPO and Commercial

Sites

Costa del Hamilo

67%44% 94%

31%

* Prospective organization chart of SM Land.


SM Development Corp.

Property Group

1H’10 1H’09 % Chg

Sales (Php bn) 5.2 3.3 +59%

Net Income (Php bn)

1.7 1.2 +39%

Net Margin (%) 27% 30% --

Net Income Profile

20

CommercialProperties,

20%

Residential,70%

Tourism,10%

| SMIC 1H2010 Media and Analyst Briefing | 05 Au gust 2010

Note: Figures may not tally due to rounding off

8/5/2010

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Strong Profit Growth for SMDC

(In Php billion) 1H’10 1H’09%

Chg

Revenues from Real Estate Sales 4.1 2.3 77%

Gross Profit from Real Estate Sales 1.8 1.1 60%

Net Recurring Income from Real Estate Sales 1.1 0.8 47%

Financing cost 0.18 0.04 312%

Net Income after Tax 1.3 1.0 24%

Return on Equity (%) 7.5% 10.6% --

Interest Cover (x) 7.4 23.6 -69%

EBITDA (Php bn) 1.3 1.1 23%

EBITDA Margin (%) 30.8% 48.0% --

Net Margin (%) 30.6% 43.7% --

Successfully emerging as a market leader

Funds from rights and bond issues used for landbanking

First-half pre-sales up 210%

Strong take up of units due to affordability, convenience, style and strong brand franchise



Strong Balance Sheet

(In Php billion) 1H’10 1H’09%

Chg

Total Assets 36.4 16.3 123%

Total Liabilities 19.7 6.7 194%

Stockholders Equity 16.6 9.6 72%

Book Value/Sh (Php) 3.0 2.3 29%

Market Cap (Php bn) 39.6 12.4 219%

Debt/Assets Ratio .34 : 1 .20 : 1

Debt/Equity Ratio .74 : 1 .34 : 1

Net Debt (Php bn) 1.8 1.9

Net Debt/Equity 10.8% 19.8%

Prudent financial management

Strong balance sheet supported by good cashflow and low gearing

Net debt to equity of only 11%

Dimensions

Chateau Mezza Berkeley

Lindenwood Grass Sea

Field Princeton Sun

Light Jazz Wind

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12 ProjectsAs of June 30, 2010

Total Land Area 707, 861 sqm.

Gross Floor Area 2.0 million sqm.

Net Sellable Area 1.3 million sqm.

% of GFA 65%

Total Units 41,895

Units Available for Sale 25,567

Units Sold 16,328

Total Capex Php49.8 billion


OneE-com Center

SMX Convention Center

SM Arena

TwoE-com Center Hotel

Existing

Upcoming

Mall of Asia

Commercial Property DevelopmentOngoing project: TwoE-Com Center for completion in 2011; GFA of 107,000 sqm.

Emerging commercial property developer

Target Market: O&O locators and other institutional clients

Existing assets: MOA Complex (60-ha land), OneE-Com, Cyber-buildings (Makati and Baguio)


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June 2010 Sales (P mn) Units for sale %

Sold%

Complete

Jacana 943 246 91% 100%

Myna 977 246 91% 100%

Carola 276 248 26% 35%

Miranda 789 248 61% 38%

Club Shares 379 4,000 21%Beach and Country Club

100% complete

Resort Development


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Hotels and Conventions


Hotels and Conventions

Hotel Projects

Project LocationNo. of

Rooms

Opens

on

Taal Vista Tagaytay 260 --

Radisson Blu Cebu 400Sept.

2010

Pico SandsPico de Loro,

Hamilo Coast150

1st Half

2011

Total 810

Tourism is now a core business for SMBy first half of 2011, SM Hotels will have a total of 810 rooms in its portfolio from only 260 rooms


picopico sandssands

Hotels and ConventionConvention and Exhibition Facilities

Project Location

Leasable

Space

(sqm)

SMXMall of Asia

Complex21,000

Megatrade Hall Megamall 4,214

Megatrade Hall Cebu 2,064

Total 27,278

SM is now the biggest in the convention business with 27,278 sqm of total leasable space.

First half revenues grew 9% to Php121 million.

SMX is highly successful and draw the country’s largest conventions and exhibitions.Group synergies with SM businesses:

Additional foot traffic to SM malls and storesHarness the value of existing land assetsCreate new avenues for SM’s brand franchise


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Group Capex for 2 nd Half 2010


Capex(Php bn) Projects

Retail 4.2 16 new stores

Malls 6.0 3 malls in the Phils.;One mall in China

Banks 2.2 Branch expansion, renovation

Property 7.6 SMDC Residential Projects, TwoE-Com, PDL Condos

Hotels and Convention 1.9 MOAC – Radisson, Pico Sands, Mid-scale boutique hotel, Sports Arena

Total 21.9

Except for historical financial and operating data and other information in respect of historical matters, the statements contained herein are “forward-looking statements”. Any such forward-looking statement is not a guarantee of future performance and involves a number of known and unknown risks, uncertainties, and other factors that could cause the actual performance, financial condition or results of operation of SM and its subsidiaries to be materially different from any future performance, financial condition or results of operation implied by such forward-looking statement.

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05 August 2010


SM Investments Corporation1st Half 2010 Media and Analyst Briefing

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