MANILA -Sy family’s SM Investments Corp is banking on its non-core businesses, such as those in the energy and logistics sectors, to achieve faster growth and significantly increase its profits.
SM Investments, led by the heirs of the late Taipan Henry Sy Sr., recently expanded beyond its core banking, real estate and retail businesses by making strategic investments in renewable energy company Philippine Geothermal Production Co., and logistics companies 2GO Group Inc. and Airspeed.
READ: SM Investments strengthens the sustainable energy portfolio
The portfolio companies currently contribute 10 percent of total profits, but Timothy Daniels, SM Investments’ investor relations and sustainability advisor, said the goal was to increase their share of the overall pie in the coming years.
“We think we can achieve this in the medium term as a percentage of contribution to the mid-teens,” Daniels said at a recent business forum.
READ: SM Investments acquires a majority stake in another logistics company
“Our optimism lies in the potential contributions of logistics and geothermal companies to achieve faster growth,” he added.
The group’s portfolio investment strategy was also intended to complement SM Investments, a $1 trillion conglomerate that owns the country’s largest bank, BDO Unibank Inc., and real estate giant SM Prime Holdings Inc.
“We select the companies that contribute to the SM Investments ecosystem. It’s about creating value and growth,” said Daniels.
SM Group, for example, said PGPC “fits SM’s goals when it comes to its sustainability agenda.”
“With PGPC, SM Group will be able to supply steam to power plants that in turn go to the communities that need them,” the report said.
During the first six months of the year, SM Investment posted a profit of P36.5 billion, up 32 percent, while total revenues rose 18 percent to over P286 billion.