CoD Manila casino riding Chinese visitor wave: Aegis
The City of Dreams Manila casino resort (pictured) should benefit from rising numbers of Chinese visitors to the Philippines, said a Friday note from Aegis Capital Corp.
The property is managed by Melco Crown (Philippines) Resorts Corp, a unit of Nasdaq-listed Melco Resorts and Entertainment Ltd. The latter is a licence holder and investor in the Macau casino market and is led by Lawrence Ho Yau Lung.
“According to reported statistics, in January to February, visitation from China to the Philippines was already +25.4 percent [year-on-year],” wrote Aegis Capital analyst David Bain.
He also mentioned a Thursday media report – citing comments by the Philippine ambassador to China – that visitor visa applications by Chinese citizens had recently risen 200 percent.
“Suggestions for growing visitation strength include warmer ties between China and the Philippines,” noted Mr Bain.
In the first quarter ended March 31, City of Dreams Manila recorded adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) that were up approximately 114 percent year-on-year, at US$61.1 million.
Mr Bain stated in his Friday note: “EBITDA was approximately 20 percent above consensus; year-on-year VIP rolling chip turnover was +60 percent and mass was +28 percent.”
He added: “We believe strong performance was driven by market strength, strong China visitation, appropriate junket utilisation (only Philippine operator with true operations/agents in Macau to leverage) and benefits from the recently opened NAIA Expressway connecting the airport to Entertainment City.”
The latter were references to an 11.6-kilometre (7.2-mile) elevated road in Metro Manila, which links to the city’s main air hub, Ninoy Aquino International Airport, and Entertainment City, a district of private-sector casino resorts created under an initiative of the local gaming regulator, the Philippine Amusement and Gaming Corp.
A Friday story from Bloomberg News said that Philippine Stock Exchange-listed Melco Crown Philippines was “the best-performing casino stock in the world this year”.
As of noon on Monday, the year-to-date return on the stock stood at 127.51 percent, according to Bloomberg data.
But Bloomberg also noted in its Friday story: “Melco Crown Philippines has trod a rocky road to casino-stock supremacy. The shares slumped 83 percent in 2015 as Beijing’s crackdown on graft and official excess sparked concern the nascent flow of Chinese gamblers could ebb.”
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