Cost savings and local play at Philippine-based casino operator Bloomberry Resorts Corp mean it might be able to reach break-even by the fourth quarter, in terms of earnings before interest, taxation, depreciation and amortisation (EBITDA), says analyst Michael Ting. That would be despite the “significant slowdown” in gaming revenues due to Covid-19, he added.
Mr Ting was referring to the group’s main business, Solaire Resort and Casino (pictured), in the Entertainment City zone in Metro Manila. The resort had been closed from mid-March as part of Philippine measures against Covid-19. More recently, it had been allowed to operate gaming at reduced capacity, under so-called “dry run” conditions.
“From our channel checks, Solaire is still running on a dry-run basis at 30-percent capacity in terms of gaming tables, where the current customer base is primarily long-stay or targeted invited players,” wrote Mr Ting in his memo.
“While daily demand remains choppy at best, we estimate that on average, Solaire is able to fill the 30-percent allocated supply,” he added. But the property might have to wait until the third quarter of 2021 to see “gaming demand and sector revenues” return to pre-Covid-19 levels, stated Mr Ting.
His note was issued on Thursday, on behalf of Singapore-based Smartkarma Innovations Pte Ltd. The latter is described as an “independent investment research network”.
According to Bloomberry filings, when phase one of Solaire opened in 2013, it had 1,653 slot machines, 295 gaming tables and 88 electronic table games. In 2014, an addition, known as the Sky Tower, was fitted with 66 gaming tables and 230 slot machines. In 2018, the property opened a new high-end venue, with eight gaming tables.
Bloomberry reported a net loss of PHP4.70 billion (US$97.1 million) for the second quarter this year. EBITA were negative by PHP1.96 billion.
Mr Ting’s memo suggested that Solaire North – the new casino project from Bloomberry in Quezon City, part of the Greater Manila area – was “not likely” to open until mid-2024.
In June, Enrique Razon, Bloomberry’s chairman and chief executive, said the pandemic crisis had pushed back the completion date of Solaire North to either the end of 2022 or early 2023.
“All of Bloomberry’s gaming-related EBITDA and net income are derived from Solaire, as Jeju was still running at an EBITDA and net profit loss in financial year 2019,” noted Mr Ting, referring to Bloomberry’s investment in foreigner-only casino gaming at the Jeju Sun Hotel and Casino on Jeju island, South Korea.
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”Month-to-date [in October], we are encouraged that our properties have crossed property-EBITDA break-even levels, led by the recovery in the premium segments”
Chief executive and president of MGM Resorts