Analysts at banking group Morgan Stanley say the “asking price” mentioned by the head of the Philippines gaming regulator for the body’s network of small, state-owned casinos “is too high and buying interest could be low”.
In other commentary on the industry-development plans of the Philippine Amusement and Gaming Corp (Pagcor), analysts Praveen Choudhary, Dan Chee, Jeffrey Mak, and Gareth Leung noted: “Expansion of iGaming offerings and electronic payment methods are positive but more details are needed.”
Alejandro Tengco, chairman and chief executive of Pagcor, said last week the body was looking to raise circa PHP80 billion (US$1.47 billion) from the sale of its casinos, citing a wish to split regulatory from operating functions.
“We are seriously considering the privatisation of all Pagcor-operated casinos,” Mr Tengco had stated. A suite of such casinos is run under the branding Casino Filipino: it includes more than 40 branches and so-called ‘satellite-casinos’, operating in leased venues from third parties.
The casinos could be bundled when they are offered to bidders to unlock greater value, stated the Pagcor boss. The gaming chief also said he hoped to implement privatisation during his term, which runs until 2028.
In a previous memo, Morgan Stanley noted that Pagcor’s own-brand casinos reported gross gaming revenue (GGR) of PHP37 billion (US$679.5 million) in 2019.
“The potential PHP80 billion [sell-off] price would imply 11 times” enterprise value to earnings before interest, taxation, depreciation, and amortisation ratio, “assuming a 20 percent margin on Pagcor’s 2019 GGR of PHP37 billion, and that the assets are free of debt,” stated the institution.
Aggregate GGR for Pagcor-operated sites reached PHP15.79 billion last year, with more than half from mass-market slot machines, at nearly PHP8.47 billion.
