Philippines casino industry to see Q3 decline - Morgan Stanley

The investment bank expects EBITDA at Bloomberry and Melco Resorts Philippines to be down 5% to 10% quarter-on-quarter.

2017-10-17

Reading time 1:21 min

Morgan Stanley said private-sector casinos in Manila are likely to see a decline in business growth in the third quarter. However, the international financial brokerage considered performance “remains strong” compared to 2016.

The Four operators of large-scale private-sector casinos in Manila 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, operated by Melco Resorts and Entertainment (Philippines) Corp; and Okada Manila, operated by a unit of Universal Entertainment Corp.

According to Morgan Stanley, respective gross gaming revenue (GGR) and earnings before interest, taxation, depreciation and amortisation (EBITDA) for three Manila casino resorts – excluding Okada Manila – are expected to decline by between 8 percent and 10 percent quarter-on-quarter, GGRAsia reported.

“
“
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 a 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.

“We cite stronger seasonality (Christmas), ramp up of Okada [Manila] (mainly VIP), and normalization of VIP luck,” said Mr Poon and Mr Choudhary.