GGRAsia – Solaire North to be a boon to Bloomberry earnings: MS

Solaire North to be a boon to Bloomberry earnings: MS

Feb 05, 2024 Newsdesk Latest News, Philippines, Top of the deck

The new resort by Philippine casino operator and developer Bloomberry Resorts Corp is expected “to be a major contributor” to the company’s earnings from the second half of this year, says a recent note from Morgan Stanley Asia Ltd.

Bloomberry runs Solaire Resort & Casino (pictured) in Entertainment City, in the country’s capital Manila. The firm is also developing Solaire Resort North, in Quezon, north of Manila, expected to open “by the second quarter of 2024,” stated the brokerage.

“Historically, it takes an integrated resort in the Philippines one to three quarters to break even” in terms of earnings before interest, taxation, depreciation and amortisation (EBITDA).

“We expect Solaire [North] to achieve positive EBITDA in third-quarter 2024, and to make PHP8 billion [US$142.2 million] EBITDA … in 2025,” wrote analysts Gareth Leung and Praveen Choudhary. The figure would represent about 40 percent of full-year 2023 EBITDA achieved at the existing property.

“This implies a circa 15 percent return on invested capital on this about US$1-billion project,” the analysts added. “Solaire North’s ramp could be supported by the same membership system as Solaire at Entertainment City.”

Another brokerage had suggested that Solaire North would “add circa 150 tables for mass and circa 2,500 for slots by first half 2024” to the Bloomberry business.

According to Morgan Stanley, Quezon City is a better location for a casino resort, given its “superior infrastructure” and the fact that it is “one of the wealthiest cities in the Philippines”, as well as “one of the biggest sources of local gamblers to Entertainment City”.

Bloomberry reported consolidated EBITDA of nearly PHP4.20 billion in the three months to September 30, up 15.1 percent from a year earlier. Third-quarter 2023 revenues were PHP10.74 billion, up 6.7 percent from the prior-year period.

Morgan Stanley said it expected Bloomberry to generate full-year 2023 EBITDA of PHP19.56 billion, up from PHP14.19 billion in 2022. The EBITDA estimate for 2023 was 7-percent lower than a previous forecast, “to reflect a weaker second half of 2023,” said the brokerage.

Bloomberry’s EBITDA could grow to PHP21.28 billion this year, a 12-percent decline on a previous Morgan Stanley estimate, to account for a “later Solaire North opening and slower growth in Entertainment City”.