GGRAsia – Philippines in flattish 3Q after strong 2Q casino luck: MS

Philippines in flattish 3Q after strong 2Q casino luck: MS

Oct 16, 2017 Newsdesk Latest News, Philippines, Top of the deck

Year-on-year business growth in the private-sector casinos in the Philippine capital Manila is likely to decline quarter-on-quarter, but performance “remains strong” compared to 2016, says banking group Morgan Stanley.

There are four operators of large-scale private-sector casinos in Manila – three in Entertainment City and one at Newport City next door to Manila International Airport. They are: Resorts World Manila, controlled by Travellers International Hotel Group Inc; Solaire Resort and Casino, developed and run by Bloomberry Resorts Corp; City of Dreams Manila (pictured), operated by Melco Resorts and Entertainment (Philippines) Corp; and Okada Manila, operated by a unit of Universal Entertainment Corp.

Morgan Stanley said it expects respective gross gaming revenue (GGR) and earnings before interest, taxation, depreciation and amortisation (EBITDA) for three Manila casino resorts – excluding Okada Manila – to decline by between 8 percent and 10 percent quarter-on-quarter. In hard numbers that would mean, respectively, sequential declines to a range of between PHP23.7 billion (US$464.4 million) and PHP5.8 billion.

“Yet, year-on-year EBITDA growth of 27 percent for Bloomberry and 21 percent for Melco [Resorts Philippines] remain strong,” said analysts Alex Poon and Praveen Choudhary in their Sunday memo.

The investment bank expects EBITDA at Bloomberry and Melco Resorts Philippines to be down 5 percent to 10 percent quarter-on-quarter, to PHP3.3 billion and PHP1.9 billion, respectively. It said the decline would be due to a likely sequential decrease of 12 percent and 27 percent in VIP revenue, respectively.

Morgan Stanley said Travellers International might record flat EBITDA in the three months to September 30, “after dropping 46 percent quarter-on-quarter in the second quarter 2017”. Travellers International shutdown some areas of the property – including the casino – during the month of June, following a lone-gunman attack that claimed 37 lives, mostly due to people inhaling smoke from a fire started by the perpetrator.

“GGR [at Resorts World Manila] could be down 9 percent quarter-on-quarter, mainly owing to removal of VIP and mass tables on second floor,” said the bank. The company had said that the second floor of the casino – affected by the June incident – would be converted into a retail zone.

Despite the sequential slowdown, Morgan Stanley still expects gaming revenue to bounce back in the fourth quarter. “We cite stronger seasonality (Christmas), ramp up of Okada [Manila] (mainly VIP), and normalisation of VIP luck,” said Mr Poon and Mr Choudhary.