The chairman and chief executive of Philippines casino operator Bloomberry Resorts Corp, Enrique Razon, said the company’s losses would narrow because its gaming revenue is growing.
“The whole [casino] industry has been painted with the same brush, but we’re nowhere near the situation in Macau, where revenue is really falling,” Mr Razon told Bloomberg News in an interview.
Bloomberry Resorts, developer and operator of Solaire Resort and Casino (pictured) in the Philippine capital Manila, reported a net loss of approximately PHP773.54 million (US$16.75 million) in the second quarter of 2015. The company reported gross gaming revenue (GGR) of PHP7.49 billion for the three months to June 30, up from PHP6.90 billion in the prior-year period.
Mr Razon told Bloomberg News that the firm’s earnings are expected to improve even as the company plans what it termed “provision” by year-end for all the unpaid credits it extended to VIP and premium players. Bloomberry Resorts made a PHP1.81-billion provision in the first half for PHP4.69-billion of receivables, the media outlet reported.
The executive added that the Philippines casino market is the size he anticipated and is still growing, supported by mass gaming and the local market.
“… our [country’s] relationship with China is really not that good… So we never had the business from China, which nowadays is probably a good thing,” Mr Razon said.
“The Philippine operators are not immune to the collapse in the Chinese VIP space, but we estimate the impact to be 10 percent to 15 percent at most. The Philippines is a much more domestically focused region,” brokerage CLSA Ltd said in a report in September.
Tom Arasi, president and chief operating officer of Bloomberry Resorts, was interviewed for CLSA’s September report. He was quoted as saying: “The Philippines gaming market features that magic balance of strong slots and tables, mass and VIP [players] and foreign plus local clientele. Only Singapore also enjoys this enviable commercial and marketing balance.”
Mr Arasi said the Philippine market would continue to be driven by a “fast-growing middle-class segment of society fuelled by rising incomes”. He added: “On the other hand, we shall continue to get our share of foreign players owing to the country’s famous hospitality, world-class properties, geographical proximity, inviting gaming environment and competitive commission rates.”
Share price
Bloomberry Resorts’ shares have fallen 61 percent this year, the worst performance on the benchmark Philippine Stock Exchange Index, which is itself down 5.3 percent on the year, according to Bloomberg News.
Several companies with casino interests in the Philippines have been buying back shares at a time when their stocks have been declining. Bloomberry Resorts has bought back 17.28 million shares since the start of a share repurchase programme on June 5, it said in a filing on August 26.
“Recent share-price weakness (almost as bad as Macau) is not fundamentally justified in our view, as Philippine GGR is making new highs,” CLSA analysts Aaron Fischer, Marcus Liu and Jon Oh said in September’s report.
Cristino Naguiat, chairman of the country’s gaming regulator, the Philippine Amusement and Gaming Corp (Pagcor), in August said the country’s gaming industry continued posting revenue growth, local media had reported.
Mr Razon said in his interview with Bloomberg News that premium customers from Southeast Asia, Taiwan and South Korea continue to arrive at Solaire.
The mass segment was expanding, aided by local and regional gamblers, said the executive, adding that in three to five years the mass market would probably account for 60 percent of Bloomberry Resorts’ gaming revenue.
Although currently only focused on the Philippine gaming market, Bloomberry Resorts is expanding its footprint in Asia. The company has bought a small casino on Jeju Island in South Korea and is reportedly among the bidders for two new licences the South Korean government will issue this year.
Mr Razon said the casino venture in Jeju might start making money next year. Bloomberry Resorts is also in the running for a casino in Incheon Free Economic Zone, near South Korea’s main international airport. The casino’s size would depend on whether the South Korean government would permit locals to gamble at such a facility or whether it would be restricted to foreigners, he added. Currently only one of South Korea’s 17 existing land-based casinos is allowed to accept locals as gamblers.
The casino operator is also is seeking a gaming permit in Argentina, where it would need to spend about US$500 million to build a “respectable” casino, Mr Razon told Bloomberg News.
