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Investor Presentation March 2015 www.sminvestments.com Table of - PowerPoint PPT Presentation

Investor Presentation March 2015 www.sminvestments.com Table of Contents Key Recent Events p.3 The Philippine Economy p.4 About SM Investments p.5 Retail Operations p.15 Banking p.22 Property p.33 Mall Operations p.39 Residential p.51


  1. Investor Presentation March 2015 www.sminvestments.com

  2. Table of Contents Key Recent Events p.3 The Philippine Economy p.4 About SM Investments p.5 Retail Operations p.15 Banking p.22 Property p.33 Mall Operations p.39 Residential p.51 Lifestyle Cities p.55 Commercial p.58 Leisure & Tourism p.60 Landbank p.64 Portfolio Investments p.66 Corporate Social Responsibility p.71 Corporate Governance p.73 Group Capex for 2015 p.74 2 Investor Presentation

  3. Key Recent Events Retail Banking Property Portfolio Investments • Opened 42 stores in • SMIC sold 2% stake • Formed Ortigas FY 2014 in BDO to Kazanah Holdings JV with • Opening of City of Ayala Land and • H&M opened in Q2 • BDO acquired One Dreams Ortigas Family Network Bank • Crate & Barrel • CityMall secures 20 • Launched largest opened in Q3 • China Bank sites for 2015 mall-based solar completed • Launched Alfamart farm in the world in acquisition of minimart format SM North EDSA Planters Bank and • Achieved 1M sqm of • Built 50 th mall in the PHP8 billion stock net selling area rights offering Philippines 3 Investor Presentation

  4. Strong Philippine Economic Fundamentals Strong GDP growth Opportunities  6.1% in 2014 Jobs creation, entrepreneurship Low cost of business Infrastructure   Energy, transport, water 2.4% inflation (Jan 2015)  Housing backlog  Ave. bank lending rate of 5.6% (Jan 2015) Exports and manufacturing base  Strong Peso FDIs Liquid, well capitalized banking system • CAR: 16.7% (Jun 2014) Net External Inflows & BPO Revenues • NPLs: 1.8% (2014) 50.0 FY 2013 42.4 Manageable debt burden BPO Rev 40.0  15.5 45.4% Govt debt / GDP (2014) OFW Rem US$ bn 30.0 Investment-grade rating Net FDI 20.0 Favorable demographics 23.0 23.3 10.0 12.6 11.6 Strong domestic consumption 8.9 3.9 0.0 VIET MAL THAI INDO PHIL Source: World Bank 4 Investor Presentation

  5. About SM Investments SM is a strong proxy for the continuing breakout of the Philippines Direct beneficiary of rising GDP and increased consumer spending Large cap and diversified market play Continued strong financial performance and healthy balance sheet SM has a strong business model and excellent management Leading player in core businesses Tightly managed to leverage strengths and extract synergies across the Group Ongoing focus on good corporate governance and shareholder value creation SM will continue to deliver growth Aggressive expansion plans in all core businesses China and Portfolio Investments provide additional upsides Funding available for both organic and acquisition-led expansion 5 Investor Presentation

  6. OUR INVESTMENTS Core Investments Portfolio Investments Retail Banking Property 28% BELLE CORP 20% 45% 29% 100% 50% CHINA ATLAS CONSOLIDATED BANCO SM RETAIL INC. SM PRIME HOLDINGS, INC. BANKING MINING DE ORO CORP . 90% NET GROUP SM SM SM SAVE MALLS RESI- COM- HOTELS LEISURE STORES* SUPER HYPER MORE DENTIAL MERCIAL & & 34% MARKET MARKET CONVEN- TOURISM CITYMALL COMMERCIAL TIONS CENTERS * 80% owned 6 6 Investor Presentation

  7. SM Investments Board of Directors From left to right: STEPHEN C. CU-UNJIENG Adviser to the Board HARLEY T. SY Director and President HANS T. SY Adviser to the Board JOSE T. SIO Director, Executive Vice President and Chief Finance Officer VICENTE S. PEREZ, JR. Independent Director JOSEPH R. HIGDON Independent Director HENRY T. SY, JR. Vice Chairperson AH DOO LIM Independent Director TERESITA SY-COSON Vice Chairperson ELIZABETH T. SY Adviser to the Board HENRY SY, SR. Chairman HERBERT T. SY Adviser to the Board 7 Investor Presentation

  8. Strong Leadership Retail Banking Property Non Food Stores BDO SM Prime Teresita Harley Teresita Henry Jr. Hans Elizabeth Food Stores Chinabank Herbert Hans 8 Investor Presentation

  9. SM Group Companies’ Rankings Philippine Philippine Philippine Property Philippine Banks Retailers Developers Conglomerates Total Resources ($bn) Total Sales ($mn) Market Cap ($bn) Market Cap ($bn) BDO 42.4 SM Prime 11.0 SMIC 14.5 SM Retail 3,033 Metrobank 36.0 Ayala Land 10.7 PLDT 14.0 Puregold 1,330 BPI 32.5 DMCI 4.7 JG Summit 10.4 Robinsons 1,250* LBP 23.8 Megaworld 3.4 AyalaCorp 9.0 *Includes all retail formats Source: Philippine Stock Exchange; Figures PNB 13.6 Robinsons Land 2.4 Aboitiz 6.5 as of Q3 2014 DBP 10.8 Filinvest Land 0.8 AGI 5.2 Philippine China Bank 10.7 DMCI 4.7 Retailers RCBC 10.4 GT Capital 4.0 UBP 10.0 Total Stores San Miguel 3.9 SECB 9.0 LT Group 2.9 Metro Pacific 2.7 SM Retail 255 Puregold 233 Robinsons 142* *Includes Supermarkets and Department Source: Business World as of Q4 2014 Stores only Source: Bloomberg; Source: Bloomberg; Source: Company Information Figures as of Dec 29, 2014 Figures as of Dec 29, 2014 9 Investor Presentation

  10. Profitability Q4 2014 % Chg FY 2014 % Chg (In PHP billion) Consolidated Revenues 82.5 11.7% 275.7 8.9% Recurring Net Income 7.6 5.6% 25.4 14.4% Net Income 10.2 15.1% 28.4 3.5% Net Margin 12.4% -- 10.3% -- 10 Investor Presentation

  11. SMIC Core Businesses FY 2014 Consolidated Results* REVENUES NET INCOME PHP275.7bn PHP28.4bn +8.9% YoY 3.5% YoY 4% 23% 38% 41% 73% 21% Property Retail Banking Note: *Banking business not consolidated 11 Investor Presentation

  12. Yield DIVIDENDS NET MARGIN 10.0 1.6% 12.0% 1.5% 9.0 1.4% 1.3% 11.0% 1.3% 10.8% 11.0% 8.0 10.6% 1.1% 1.2% 10.3% 7.0 1.0% 10.0% 1.0% PHP bn 6.0 5.0 0.8% 9.0% 4.0 0.6% 3.0 8.0% 0.4% 2.0 0.2% 7.0% 1.0 0.0 0.0% 2010 2011 2012 2013 2014 6.0% Dividends Paid 4.8 5.5 6.4 7.4 8.2 2011 2012 2013 2014 Dividend Yield (%) 1.0% 1.1% 1.3% 1.5% 1.3% Net Margin 10.6% 11.0% 10.8% 10.3% Dividend Yield is based on closing price as of December 29, 2014 Net margin excluding extraordinary income Dividend Payout Ratio is at 30% 12 Investor Presentation

  13. Financial Strength and Returns TOTAL CAPITAL RETURN ON EQUITY 600.0 15.0% 1.2 14.3% 14.2% 500.0 1 14.0% 400.0 0.8 PHP bn 13.0% 300.0 13.0% 0.6 200.0 0.4 12.0% 12.0% 100.0 0.2 0.0 11.0% 0 2011 2012 2013 2014 Cash & NCE 100.8 126.6 111.2 128.1 Net Debt 61.33 93.61 126.5 133.6 Equity 157.7 188.1 219.4 257.3 10.0% 2011 2012 2013 2014 Net Debt to Equity 28:72 33:67 37:63 34:66 Ratio ROE 14.2% 14.3% 13.0% 12.0% 13 Investor Presentation

  14. SMIC Parent Debt Average Debt Tenure: 5.3 Years Average Cost of Debt: 5.57% Peso/Foreign: 46 : 54 Recent Bond Offerings Issued Amount Currency Due Date Coupon Jun 10, 2014 USD350 million US Dollar Jun 2024 4.875% May 19, 2014 PHP15 billion Philippine Peso May 2021/May 2024 5.2958%/5.6125% Oct 17, 2012 USD500 million US Dollar Oct 2019 4.25% Jul 16, 2012 PHP15 billion Philippine Peso Jul 2019/Jul 2022 6.0%/6.9442% US Dollar Feb 15, 2012 USD250 million Feb 2017 1.625% (Convertible) 14 Investor Presentation

  15. Retail Q4 2014 % Chg FY 2014 % Chg (In PHP billion) Sales 60.7 8.4% 197.1 9.0% Operating Income 3.0 2.0% 8.5 6.0% Net Income 2.1 0.4% 5.9 3.3% Net Income Margin 3.4% -- 3.0% -- 15 Investor Presentation

  16. Store Statistics Business Strategy Gross Ave. Gross Stores as of Store Format Selling Area Selling Area Non-Food Retail Dec 2014 (in sqm) (in sqm) • Provincial expansion SM Store 50 665,521 13,310 • Enhanced store layouts • New brand introductions SM Supermarkets 40 294,723 7,368 Savemore 113 353,745 3,130 Food Retail • Accelerated expansion SM Hypermarket 42 356,476 8,488 through organic growth and partnerships Walter Mart 24 76,423 3,184 • Multiple store formats Total 269 1,746,888 -- • First mover in minimarts 16 Investor Presentation 16

  17. SM Retail Philippines Luzon Number Gross % of Total Population Area of Retail Selling Area Gross Selling 41.6 million Stores (sqm) Area NCR NCR 100 781,745 45% Population 11.9 million Luzon 125 684,969 39% Visayas Visayas 29 175,816 10% Population 20.2 million Mindanao 15 104,358 6% Mindanao Total 269 1,746,888 100% Population 23.7 million 17 Investor Presentation

  18. Retail Operations REVENUES NET INCOME 250.0 16.0% 8.0 40.0% 13.8% 12.0% 7.5 9.3% 9.0% 200.0 20.0% 8.0% 10.4% 7.0 7.2% 4.5% 3.3% 4.0% 6.5 Php Bn 150.0 0.0% PHP bn 0.0% 6.0 -4.0% -12.2% 100.0 -20.0% 5.5 -8.0% 5.0 -12.0% 50.0 -40.0% 4.5 -16.0% 0.0 -20.0% 4.0 -60.0% 2011 2012 2013 2014 2011 2012 2013 2014 Revenues 148.2 158.9 180.9 197.1 Net Income 5.9 6.5 5.7 5.9 % Growth 9.3% 7.2% 13.8% 9.0% % Growth 4.5% 10.4% -12.2% 3.3% 2014 recurring net income grew 14.4% 18 Investor Presentation

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