Philippine Retailing Newsletters 2018 PRA Newsletter 2018 Q1 | Page 3

1ST QUARTER 2018 PH F&B, retail sectors more profitable than telco, property A comparative outlook at profitability indicators since 1997 shows that retail, and food-and-beverage companies have averaged higher rates of return than some of the top telecommunications and real-estate companies in the Philippines. These points to the capital-intensive nature of telco and real-estate industries, which contribute significantly to national infrastructure and development. An academic research paper by University of the Philippines (UP) Professor Emeritus Epictetus Local News Patalinghug, PhD, shows that over a longer time horizon, PLDT and Globe Telecom, as well as real- estate companies, such as SM Prime and Ayala Land, are earning below the average rate of returns attained by top Philippine firms in other industries. Department store chain SM, for instance, had a return on assets (ROA) of 14.42%, while the ROA of a beer company, such as Asia Brewery, reached 12.13%. Late last year, Ayala Malls have partnered with Alibaba’s Ant Financial in a bid to kick-start the popularization of QR payments in the country through the use of Globe Gcash, which was initially launched in Glorietta, and later adopted by other Ayala Malls. Robinsons on the other hand has partnered with PLDT’s PayMaya to launch their own QR payment. While SM has used both Globe and Paymaya’s services for its own cashless payment options among its malls. With the use of QR payments, shoppers can load up their digital wallet and pay using designated Apps and thru scanning QR stickers displayed in the merchant’s establishment. Moreover, merchants do not need to buy and install equipment, but would only need printed QR stickers which the customers will scan with their smart phones to complete transactions. According to data, 75% of Filipinos do not have bank accounts, while 95% do not use credit cards. More significantly, high capital-intensive industries evidently require high margins to be viable. The lack of government spending on national telecommunications networks, and on much needed housing and transport infrastructure, adds to the challenges of competing in the said industries. (Business Mirror, 01/15/2018) PLDT and SM Prime, on the other hand, recorded ROAs of only 9.18% and 8.49%, respectively. Globe and Ayala Land were even lower in rank with 6.7% and 5.96%. Data show that as telcos and developers aggressively embark on increasing capital expenditures, they must be able to generate enough cash flow to sustain the needed investments in capital-intensive industries. 3 major malls introduce SM Prime issuing P20-b bonds to fund expansion cashless payments With the continued rise of digital technology in shopping, the three major malls in the country have recently launched cashless payment method to ease burden of bringing cash when shopping and open more options for payment among shoppers PHILIPPINE RETAILING SM Prime Holdings Inc. plans to raise P20 billion in fixed rate bonds to fund mall expansion and residential projects. SM Prime said in a disclosure to the stock exchange it filed with the Securities and Exchange Commission an application for a permit to sell fixed-rate bonds in the amount of P15 billion with an oversubscription option of up to P5 billion and with maturities of five years and seven years. SM Prime plans to open eight malls this year, mostly geared toward the provincial cities, to hit its target of 75 malls by the end of 2018. The malls slated for opening this year are SM Center Imus, SM City Legaspi, SM City Urdaneta, SM City Telabastagan, SM City Ormoc, SM Center Dagupan, SM Moonwalk Parañaque and SM Center Cabuyao. The opening of new malls will boost the group’s mall gross floor area to 10.5 million square meters. SM Prime as of end 2017 had an available land bank of 141.66 hectares for future mall development. (Manila Standard, 01/16/2018) SM Prime’s latest bond offering is the third of the company’s P60 billion three-year debt securities program approved by the SEC in July 2016.  SM Prime has tapped BDO Capital and Investments Corp., China Bank Capital, BPI Capital Corp., First Metro Investments Corp., PNB Capital and Union Bank as joint underwriters for the offering. Fashion Brand Bench opens flagship café to make you feel that you’re not just entering a store, you’re entering the Bench universe,” said Ben Chan, chair and founder of Bench and Suyen Corp. Worldwide, there is an increasing trend of fashion brands opening up their own brand cafes. “We serve glamorized turo-turo. It’s kanin, two ulam, gulay, and you can upgrade with a sabaw or special rice. It’s a complete meal served on a tray,” said Eric Dee, COO of FooDee Global Concepts. Leading the way on the local front is Bench Cafe, which opened in January at the 2nd Floor of Bench Flagship Store in Bonifacio Global City, Taguig. Bench Cafe is under the expert guidance of Manila’s top multibra nd food group, FooDee Global Concepts, and kitchen-manned by celebrity chef Carlo Miguel. “For our 30th anniversary, we decided it was high time to open a true Bench flagship store, a multidimensional, multisensory experience that would express every facet of the brand. Something Designed by architect Miguel Pastor, Bench Café’s interiors evoke a modern-day diner inspired by bahay na bato. There are padded leather couches, bright drop lights, wall posters, reflecting bronze mirrors and a cabinet that showcases cooking apparatus giving a retro, 1950s American diner ambiance. “The Bench Flagship store is an expression of our taste—our taste in clothing, interiors, architecture, music, scents, our whole aesthetic. In it, you will find what we consider interesting and beautiful,” Chan said. (Inquirer.net, 01/25/2018) 3