SMIC launches P60-B share buyback program
For the first time in its over 60-year history, SM Investments Corp. (SMIC) is launching a P60-billion share buyback program—which is also the biggest in the country so far.
SMIC president and CEO Frederic DyBuncio, in a statement on Friday, said they decided to buy back the shares from the open market to beef up their prices.
“In the current market we trade well below our historical valuation multiples, which do not reflect the performance and future growth potential of the group,” DyBuncio said.
On Friday, SMIC shares dropped by 1.92 percent to P765 each.
“We always aim to create and return value to our shareholders. This program intends to do so by authorizing the buyback of up to approximately 6 percent of our shares outstanding,” DyBuncio added.
This is equivalent to about 77 million shares.
A buyback program boosts shareholder value by reducing the number of outstanding shares, thereby improving future earnings per share.
China Bank Capital Corp. managing director Juan Paolo Colet, in a message to the Inquirer, said that SMIC was “signaling its strong conviction that its shares are trading at a significant discount to fair value” with the announcement of the “largest” buyback program in the Philippines to date.
“It also shows optimism in our country’s economic prospects given the SM Group’s presence in many key domestic sectors and industries,” he added.
Net income
The Sy-led conglomerate saw its net income climb by 7 percent to P82.6 billion last year due to the strong performance of its core businesses. Revenues, meanwhile, rose by 6 percent to P654.8 billion last year.
“Our core businesses all grew, supported by positive macroeconomic fundamentals and healthy consumer sentiment,” DyBuncio said.
SM Retail registered revenues of P434.5 billion, showing 5-percent growth from P412.9 billion in 2023. The food segment contributed the highest revenue growth at 8 percent on the back of store network expansion.
Higher rental income and real estate sales lifted the revenues of SM Prime Holdings, the property arm, by 10 percent to P140.4 billion for the period. The mall segment accounted for more than half of the revenue contribution.
