ENDEAVOR
At an early age, I became aware of Shoemart Carriedo or SM. On my birthday, my mother would bring me to Quiapo church to hear mass, after which we walked over to the Brown photo studio on Dasmariñas street for my solo portrait. Then we would go to SM Carriedo, one of the first shoe stores to be establised in the late 1950’s after the first one was opened on Avenida Rizal.
Fast forward to 1985 when SM opened its first mall at North EDSA Quezon City. I was then working with Far East Bank (that was merged with Bank of the Philippine Islands in 2000) which opened a branch within the mall. That marked the inception of malls, as they are known today, in the Philippines.
Recall that it happened during a time of turmoil that culminated with EDSA People Power in 1986.
Such was the SM founder’s profound belief in the resilience of the Filipino spirit. His entrepreneurial drive was undeterred by conventional wisdom that militated against investing substantial business capital at risk in a period of turmoil.
The rest is history.
In retrospect, Mr. Sy’s wisdom has been validated. His flagship company, SM Investments Corporation (SM Investments) has long been a pillar of the Philippine economy, playing a pivotal role in the country’s consumer-driven growth.
SM Investments Corporation is more than just a conglomerate; it is a cornerstone of the Philippine economy. With its strong fundamentals, expansive geographic footprint, synergistic business model, and high-quality assets, SM Investments continues to create long-term value for investors. These qualities not only highlight the company’s strength but also justify its recent decision to embark on a ₱60-billion share buyback program—an initiative that signals confidence in its future growth potential.
The Philippine economy is heavily reliant on domestic consumption, which accounts for a significant portion of GDP. As one of the largest conglomerates in the Philippines, SM Investments is uniquely positioned to capitalize on this trend through its businesses in retail, banking, and property development. Its retail arm, SM Retail, operates an extensive network of department stores, supermarkets, and specialty shops that cater to millions of Filipinos nationwide. This extensive reach ensures that SM Investments remains at the heart of the country’s consumer spending boom, benefiting from rising incomes and increased purchasing power.
Beyond retail, SM Investments’ banking subsidiary, BDO Unibank, is the largest in the country in terms of assets, deposits, and loans. BDO’s financial services complement SM Investments’ consumer-driven businesses by providing accessible financing options that further stimulate spending and investment. With the continued digitalization of financial services and the growing demand for banking solutions, BDO remains a key driver of SM Investments’ long-term profitability. China Banking Corporation, also part of the SM group, and fourth-largest non-government bank in assets has over 100 years of banking experience and history. Focused on customers, Chinabank offers a full range of banking products and services and financial solutions.
One of SM Investments’ defining strengths is its extensive presence across the Philippines. The company’s core businesses—retail, property, and banking—have expanded far beyond Metro Manila, penetrating key regional and provincial markets. SM Prime Holdings, its property arm, has developed malls, residential communities, and commercial hubs, hotels and convention centers in nearly every major city in the country. This wide geographic footprint allows SM Investments to tap into emerging growth areas, particularly in fast-developing provinces where urbanization and infrastructure development are accelerating.
This strategy of regional expansion in the service of more Filipino communities not only diversifies risk but also positions SM Investments for sustained growth. As more Filipinos gain access to higher incomes and modern retail experiences, SM Investments’ presence in both established and emerging economic centers ensures that it remains the preferred brand for consumers across all demographics.
A key factor behind SM Investments’ resilience and sustained success is its well-integrated business ecosystem. The company’s diverse portfolio—spanning retail, banking, and property—creates powerful synergies that drive mutual growth among its subsidiaries. SM Prime’s malls, for instance, provide the ideal commercial space for SM Retail’s various brands while also attracting foot traffic that benefits tenants. Meanwhile, BDO’s and Chinabank’s banking services support both SM’s retail customers and property buyers, ensuring that financial solutions are readily available to drive sales and investments.
This interconnected ecosystem enhances operational efficiency, reduces costs, and maximizes profitability across all business segments. More importantly, it provides SM Investments with multiple revenue streams that ensure financial stability even during economic downturns. When one sector faces challenges, other segments help cushion the impact, making SM Investments a consistently strong performer in the Philippine corporate landscape.
Another major strength of SM Investments is its extensive portfolio of high-quality assets that generate stable, recurring income. SM Prime’s mall and office leasing businesses, for example, provide steady cash flows through long-term lease agreements with tenants. Even during periods of economic uncertainty, these properties continue to deliver consistent rental income, ensuring financial stability for the conglomerate.
Beyond malls and office spaces, SM Investments has also made strategic investments in logistics, geothermal energy and tourism, further diversifying its income sources. These high-quality assets provide the company with resilience against economic volatility while ensuring a steady flow of cash that can be reinvested into new growth opportunities.
Despite its strong fundamentals, SM Investments remains relatively undervalued compared to its intrinsic worth. With a robust balance sheet, stable earnings, and multiple growth catalysts, the company presents an attractive investment opportunity. Investors who recognize SM Investments’ long-term potential stand to benefit from its continued expansion and increasing market dominance.
This undervaluation likely influenced the company’s decision to launch a ₱60-billion share buyback program—one of the largest in Philippine corporate history. A share buyback signals management’s confidence in the company’s financial health and future prospects. By repurchasing its own shares, SM Investments aims to enhance shareholder value, optimize capital allocation, and take advantage of what it perceives as a mispricing in the market.
With a strong consumer-driven business model, extensive nationwide expansion, a synergistic and diversified portfolio, high-quality recurring income assets, and a promising pipeline of large-scale projects, SM Investments is poised for continued growth and long-term stability.