Total casino gross gaming revenue (GGR) at Manila’s three newest private-sector casino resorts grew by an aggregate of 23 percent year-on-year in the second quarter of 2015, said a note from DBP-Daiwa Capital Markets Philippines Inc issued on Monday. That was despite the resorts posting a combined loss of about PHP2.0 billion (US$43.1 million) in the period, the institution added.
“This indicates a growing market base and illustrates that new integrated resort openings do not necessarily imply market cannibalisation on the older properties,” wrote DBP-Daiwa analysts Patricia Tamase and Bianca Solema.
Cristino Naguiat, chairman of the country’s casino regulator, the Philippine Amusement and Gaming Corp, had noted in a recent interview with The Philippine Star newspaper that gaming revenues were “still up” despite a run of poor results reported during the second quarter of 2015 from the three major private sector operators currently active in the Manila market.
Nonetheless analysts at brokerage Sanford C. Bernstein Ltd in Hong Kong flagged in a recent note concerns that it could become harder for Philippines and South Korean casinos to recruit high value Chinese players following the launch by mainland China’s Ministry of Public Security of an operation called “Chain Break”. The move is reportedly aimed at disrupting foreign casinos’ access to money flows from China and those casinos’ links to individuals that scout for gamblers from China.
Willy Ocier, chairman of Premium Leisure Corp, an investor in City of Dreams Manila, said in an interview with The Philippine Star, published on Tuesday, he was confident operations at the casino resort would show improvement in the second half of the year as its VIP trade rises.
On August 7, Melco Crown (Philippines) Resorts Corp, operator of City of Dreams Manila, reported its second quarter results to the Philippine Stock Exchange. They showed that the firm’s consolidated comprehensive loss for the three months ended June 30 had widened by 27 percent from the prior-year period.
On August 11, a spokeswoman for City of Dreams Manila confirmed to Reuters news agency that the venue had “suspended” 100 workers as a cost-cutting measure.
DBP-Daiwa commented in its Monday note that Melco Crown Philippines had already been moving aggressively in the second quarter to control costs. “Expenses declined by 7 percent quarter-on-quarter due to much lower advertising and marketing costs (down 87 percent quarter-on-quarter to comprise around 3 percent of total expenses versus 19 percent of total expenses in the first quarter of 2015),” wrote Ms Tamase and Ms Solema.
On August 13, Bloomberry Resorts Corp, developer and operator of Solaire Resort and Casino also in the Philippine capital Manila, reported a net loss for the second quarter of 2015. The company had already reported a net loss for the first three months of the year.
On August 14, Travellers International Hotel Group Inc reported a 46.4-percent decline year-on-year in net profit for the three months to June 30.
Travellers International, a venture between Philippine-based Alliance Global Group Inc and Genting Hong Kong Ltd, developed and operates the Resorts World Manila casino and hotel complex next to Manila International Airport.
DBP-Daiwa said Bloomberry’s quarterly numbers were negatively affected by “continued drag” from additional expenses related to its opening in November of Solaire’s Sky Tower and the acquisition of Jeju Sun Hotel and Casino in South Korea.
The analysts stated the expenses included provision of PHP179 million in the second quarter for doubtful accounts at Solaire, compared to PHP17 million in the year-prior period as well as negative earnings before interest, taxation, depreciation and amortisation (EBITDA) of PHP280 million for Jeju Sun, where casino operations have been suspended since May to allow for renovations.
They noted however that bad debt provision at Solaire “already declined substantially from the surprise in the first quarter of 2015, to about 5 percent of VIP GGR in the second quarter of 2015 from 19 percent [in the previous] quarter.”
DBP-Daiwa said that at Melco Crown Philippines, City of Dreams Manila’s GGR improved sequentially in the second quarter, “up by 50 percent quarter-on-quarter to PHP3.1 billion due to mass GGR growing by around 21 percent quarter-on-quarter and a positive contribution of PHP533 million from the VIP segment (from -PHP66 million in the first quarter of 2015).”
The analysts noted that at Travellers International, the second quarter numbers had been hurt by a “252 percent increase in promotional allowances as Resorts World Manila signed up more revenue-sharing agreements with new junkets, bringing net revenues down 21 percent year-on-year”.
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Alex Poon and Praveen Choudhary
Analysts at Morgan Stanley