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.