GGRAsia – Suncity proxy immaterial for Bloomberry’s EBITDA: Nomura

Suncity proxy immaterial for Bloomberry’s EBITDA: Nomura

Aug 14, 2019 Newsdesk Latest News, Philippines, Top of the deck

Brokerage Nomura says it does not expect Suncity Group’s decision to withdraw from proxy betting to have a significant impact on the results of Philippine casino operator Bloomberry Resorts Corp.

The stockbroking arm of Nomura issued on Tuesday a note on the latest financial results of Bloomberry Resorts which said proxy betting arranged by Suncity Group – said by investment analysts to be one of the largest VIP gambling organisers in Macau – accounts for an “immaterial” portion of Bloomberry Resorts earnings before interest, taxation, depreciation and amortisation (EBITDA).

The Nomura note stated: “Suncity Group has already stopped all its video streaming operations in Solaire. [Bloomberry Resorts] Management highlighted that while about 10 percent of total gross gaming revenues [GGR] are tied to Solaire’s overall video streaming operations, Suncity’s contribution to the EBITDA level is only about 3 percent or lower, which is immaterial, in our view.”

Bloomberry Resorts subsidiaries own and operate the Solaire Resort and Casino (pictured) in Manila, and the Jeju Sun Hotel and Casino on the South Korean island of Jeju.

In July Suncity Group told GGRAsia that it had stopped what it called “tele-betting” outside of Macau. The junket investor said so after Chinese state-backed media questioned the propriety of some of its practices.

Suncity Group publicly denied the online gaming allegations, adding that even if certain “products” – such as proxy betting – were “legally allowed to operate in other countries and regions, the company will not adopt them if the laws of Macau do not allow it”.

In proxy betting, a gambler places bets at a casino remotely, by using by phone or some other device to give instructions to an agent, usually a representative of a junket operator, who is present at the casino. Proxy betting was banned in Macau in 2016, and has since become popular in the Philippine casino market, according to a note issued by Goldman Sachs (Asia) LLC last month.

Both Goldman Sachs and Chinese investment bank China International Capital Corp (CICC) have remarked that the VIP gaming earnings of casinos in the Philippines could suffer if proxy betting were no longer pursued in that market.

Bloomberry Resorts reported last Thursday that its profit rose to nearly PHP2.46 billion (US$47.4 million) in the second quarter of 2019, 50.3 percent more than a year earlier. Second-quarter GGR rose by 19.1 percent to PHP14.76 billion.

Nomura said Bloomberry Resorts’ first-half results were “slightly ahead” of the brokerage’s full-year estimates for the casino operator, supported by growth in the mass-market segment.