Philippines-based casino investor Bloomberry Resorts Corp saw its second-quarter profit decline 16.7 percent year-on-year, to nearly PHP1.64 billion (US$30.9 million), compared to PHP1.97 billion in the prior-year quarter. The firm said the decline was partially related to a decline in casino revenue in its operations in South Korea.
Bloomberry’s consolidated net revenues for the April to June period jumped 7.7 percent year-on-year, to PHP10.60 billion, the firm said in a filing on Wednesday. Consolidated gross gaming revenue (GGR) stood at PHP12.39 billion, up by 1.4 percent in year-on-year terms.
Company-wide earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 3.0 percent year-on-year to nearly PHP3.75 billion.
Bloomberry developed and operates Solaire Resort and Casino (pictured) in Manila, the Philippines capital. The firm also operates the Jeju Sun Hotel and Casino, a foreigner-only casino complex on South Korea’s southern holiday island of Jeju.
Jeju Sun “continued to feel the adverse effect of competition and the decline in Chinese tourist arrivals in Jeju,” said Wednesday’s results filing.
The South Korean market for inbound tourism has been facing headwinds due to a political row between that country and China over the siting on South Korean soil of a U.S.-supplied missile system – known as Terminal High Altitude Area Defense (THAAD) – designed to counter North Korea’s ballistic missile programme.
While the aggregate number of visitors to South Korea increased by 6.9 percent year-on-year in the first six months of 2018, to nearly 7.22 million, the number of Chinese visitors however fell 3.7 percent year-on-year during the same period, according to official data. Still, Chinese tourists accounted for 30.1 percent of all visitor arrivals to South Korea between January and June; such visitors are particularly important for Jeju’s foreigner-only casino sector.
Jeju Sun generated PHP52.4 million of GGR in the second quarter, down by 54.0 percent from last year. Bloomberry’s operations in South Korea posted PHP74.9 million negative EBITDA or 71.0 percent negative EBITDA margin in the second quarter “due to lower gaming revenues”, the firm said.
“The grand opening of Jeju Shinhwa World in 2018, an estimated US$1.8-billion project in the southern part of Jeju, had a significant negative impact on other smaller properties including Jeju Sun,” Bloomberry stated. Jeju Shinhwa World is controlled by Hong Kong-listed casino investor Landing International Development Ltd.
“The Korean operation also registered PHP387.3 million in foreign exchange loss mainly due to the continued depreciation of the Korean won against the U.S. dollar in the quarter,” the firm added.
Commenting on the quarterly results, Bloomberry’s chairman and chief executive, Enrique Razon, said in a statement included in a separate press release: “We continue to make progress towards establishing a solid enterprise. Our fundamentals remain strong, and we look forward to a busy second half and end 2018 with robust full year results.”
Solaire performance
During the second quarter of 2018, Bloomberry’s flagship Manila gaming resort, Solaire Resort and Casino (pictured), posted “record mass table drop and electronic gaming machine (EGM) coin-in, [and] new all-time high GGR for Solaire’s mass table and EGM gaming segments,” the firm stated.
Solaire’s VIP volume for the period grew by 4.8 percent in year-on-year terms, said the firm. But due to a lower 2.49 percenr VIP hold rate – compared to 3.49 percent in the prior-year period –, the property’s VIP GGR stood at less than PHP4.67 billion, down 25.1 percent.
“The lower VIP GGR resulted in Bloomberry’s promotional allowances and contra accounts to contract by 12 percent quarter-on-quarter to PHP2.68 billion,” the firm said.
Mass table drop and EGM coin-in posted strong year-on-year growth rates of 21.3 percent and 19.2 percent, Bloomberry said. In the second quarter, Solaire generated PHP10.98 billion and PHP53.2 billion of mass table drop and EGM coin-in, respectively.
Overall GGR at Solaire grew by 1.9 percent year-on-year to PHP12.33 billion.
Solaire’s hotel occupancy for the period was 93.2 percent, “broadly in line with the previous quarter and 2.5 percentage points higher than the 90.7 percent posted in the same quarter last year,” Bloomberry stated.
Bloomberry’s unit Sureste Properties Inc paid in June PHP37.33-billion to casino regulator-cum-operator the Philippine Amusement and Gaming Corp, for two parcels of land in Metro Manila that are home to Solaire. The company used a syndicated loan to finance the acquisition.
The company noted that land it owns at Incheon, near South Korea’s capital Seoul – namely 12.2 hectares (30.1 acres) of Muui Island and the entire 20.96 hectares Silmi Island – is still earmarked for “leisure and tourism… with entertainment facilities and mixed uses developments”.
The results announcement made no mention of Quezon City as the site for a mooted new project near Manila. Construction is reportedly scheduled to start next year.
