More Wow. SM Investment’s 1H Debt Swelled by a Whopping Php 81.8 Billion (Almost 2 years of Income)!

SM Investments declared that net income grew by 9% in the 1H

 

Here is what the public doesn’t know.

From SM’s 17Q  (p.24) [emphasis added]

Bank Loans increased by 62.9% to P22.8 billion from P14.0 billion in 2016 due mainly to loan availments.

Current Portion of Long-term Debt increased by 134.0% to P59.9 billion from P25.6 billion in 2016 due mainly to maturing debts.

Long-term Debt - Net of Current Portion decreased by 0.6% to P278.6 billion from P280.3 billion in 2016 due mainly to reclassification of maturing debts to current, partially offset by new availments.

The comparative figures have been based on December 2016.

YoY total borrowings surged to Php 361.25 billion in 1H 2017 from 279.453 billion. That amounted to Php 81.8 billion or a 29.7% increase.

Let us put the debt numbers in perspective.

For every peso of net income growth, SM borrowed 3.3 pesos!

SM earned P 47.8 billion in the year 2016 and Php 43.7 billion in the year 2015 for a total of Php 91.4 billion. Thus 1H borrowing of Php 81.8 billion represents 90% of SM’s two-year of net income!

SM’s total debt has now equaled 2016’s gross revenues of Php 362.8 billion

SM growth model increasingly looks like SMC.