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SM Investments Posts ₱88.8B Profit; Buyback Program Signals Confidence Amid Liquidity Pressures


SM Investments Corporation (SMIC) reported consolidated revenues of ₱482.3 billion for the nine months ended September 30, 2025, up 4.3% from last year, while net income after tax rose 5.6% to ₱88.8 billion, according to its latest SEC filing. Net income attributable to the parent reached ₱64.4 billion, driven by strong contributions from banking and property segments.

Retail, which accounts for 66% of revenues, posted ₱318.1 billion in sales and ₱12.2 billion in net income. However, management flagged margin pressure from frequent flooding in Q3 and promotional activity in sports and athleisure categories. Merchandise inventories climbed to ₱47.9 billion, raising concerns over potential markdowns if consumer demand softens.

Property arm SM Prime delivered ₱103.4 billion in revenues and ₱37.2 billion in net income, supported by mall rental growth of nearly 7%. Still, residential sales slipped 2% amid slower revenue recognition, while capital expenditures surged to ₱59 billion year-to-date, part of a ₱100 billion full-year budget. Construction-in-progress now stands at ₱160.8 billion, with ₱40.7 billion in outstanding contractor commitments.

Banking associates BDO and China Bank remain SMIC’s profit engine, contributing ₱39.1 billion in equity earnings—around half of consolidated net income. Portfolio investments added ₱4.5 billion, though Philippine Geothermal Production Company saw a 16% revenue drop due to lower steam prices pegged to WESM.

Buyback Program: Boost for Valuation, Strain on Liquidity?

In February, SMIC launched a ₱60 billion share buyback program, repurchasing 3.7 million shares at an average price of ₱764.08, totaling ₱2.8 billion as of September. The move signals confidence and could support share price by reducing supply and lifting earnings per share, which rose to ₱52.73 year-to-date.

Analysts note, however, that the buyback coincides with declining cash reserves—₱85.8 billion, down 24% from year-end—and hefty near-term debt maturities of ₱126 billion. “The program is positive for valuation, but balancing shareholder returns with liquidity and refinancing needs will be critical,” one market strategist said.

Debt and Liquidity

SMIC’s interest-bearing debt climbed to ₱511.4 billion, while the current portion of long-term debt rose to ₱126 billion. Despite this, leverage ratios remain stable, with a current ratio of 1.1x and interest cover at 8.6x.

Outlook

Management expects continued expansion in retail and property, with SM Prime targeting ₱100 billion in capex for malls, residential projects, and integrated developments. However, risks loom from residential sales timing, banking sector dependency, and liquidity pressures amid aggressive capital allocation.

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