SM’s Mall of Asia along Manila Bay is the largest shop[ping complex in the Philippines.
SM Investments—the holding company of the family of the late retail billionaire Henry Sy Sr—will spend 60 billion pesos ($1 billion) to buy back its shares, which are trading at a two-year low.
The open-ended buyback is the biggest ever for a Philippine company and the first for the Manila-based conglomerate, which posted a 7% increase in net profit last year to 82.6 billion pesos.
“We believe in the upside of the market and our economy,” Teresita Sy-Coson, vice chairman of SM Investments told Forbes Asia via text message. “The growth can be sustained.”
With SM Investments shares down 15% this year, Franklin Gomez, senior vice president of SM Invesments, says the stock is undervalued. Its trading at about 11 times price-to-earnings ratio currently, compared with 36 times back in 2017, he noted.
Gomez said the company has sufficient cash to bankroll expansion plans and fund the buyback. It raised $500 million in bonds in 2024, while unit SM Prime has earmarked 100 billion this year to expand its property footprint across the Philippines.
“We see the potential of the Philippines for a very long term so the way we appreciate SM Investments’ value is on a much longer time horizon compared with other investors with a much shorter time horizon,” Gomez said at a media briefing on Friday.
SM Investments’ buyback comes at a challenging time with the property sector seeing softening demand with developers sitting on thousands of unsold condominiums units in Metro Manila.
“The Sy family is putting up the largest buyback in Philippine corporate history,” said John Gatmaytan, chairman at Luna Securities and who has been trading stocks for four decades. “They must be seeing something that the public is missing.”
SM Investments also has interests in banking, geothermal energy, logistics, retail, and shipping. The group traces its roots to Henry Sy Sr., who sold overrun shoes in 1958 at a store in Manila he aptly called Shoemart and built his first shopping mall amid political turbulence in the early 1980s. Following Sy’s death in 2019, his six children—Teresita, Elizabeth, Henry Jr, Hans, Herbert and Harley—inherited his fortune. The family is the richest in the Philippines with a net worth of $13 billion.
“This is a family that made its fortune by betting during the worst of times for the Philippines,” Gatmaytan said. “SM Investments wouldn’t have grown this big if they didn’t know how to ride the business cycle.”