Demand seen aiding Bloomberry recovery
RAZON-led Bloomberry Resorts Corp., operator of the Solaire Resort and Casino, likely sustained a recovery in 2022 and is expected to continue performing positively this year.
Maybank Securities analyst Miguel Sevida premised this outlook on domestic demand-driven earnings growth, projected at 30 percent for this year and estimated at around 70 percent in 2024, and China’s reopening and a re-rating for the gaming sector.
In November last year, Bloomberry reported a nine-month consolidated net income of P4.0 billion, rebounding from a P3.0-billion loss a year earlier. the first nine months of 2021.
In the third quarter alone, the company posted a consolidated net of P1.5 billion, also recovering from the year-earlier’s P1.1 billion loss.
“Bloomberry Resorts shares have also rallied 24 percent year-to-date, outperforming both the PSEi (5 percent) and Macau peers (10 percent average). Even so, Bloomberry Resorts’ 9.6x enterprise value/EBITDA (earnings before interest, tax, depreciation, and amortization) represents a 51 percent discount to Macau peer valuations,” Sevidal said.
“We forecast the firm’s hold-normalized gross gaming revenue (GGR) to post a 37 percent compound annual growth rate (CAGR) from the end of 2022 to 2024,” he added.
“This will be driven by strong recovery in sales drop volumes, especially for mass market and slots and contributions from Solaire North, which we expect to open in the second quarter of 2024.”
China’s gradual reopening, meanwhile, would provide also provide an earnings lift.
“Greater China visitors to the Asia Pacific region are expected to reach about 10.5 million in the full year of 2023 or 38 percent of pre-pandemic levels,” Several said.
“Even as the Philippines is a modest beneficiary of this, the expected recovery in Greater China tourist arrivals lifts our full-year 2023 earnings estimates for the gaming firm by 14-29 percent, as Greater China players generated around 35 percent of Bloomberry Resorts’ pre-pandemic GGR,” he added.
“However, it will not be the main driver as the ‘quality’ of Chinese VIPs coming in is expected to drop, as evidenced by the decline in Chinese property prices and manufacturing and the shift in Macau’s VIP-to-mass mix toward masses.”
Maybank Securities noted that Bloomberry was strong in both the high-roller VIP segment and the broad- based mass and slots segments and had around 40 percent share of mass GGR market.
“The firm is also currently constructing Solaire North (which costs $1 billion), which is projected to lift GGR by 75 percent by its third year of operations. The said property will focus on mass and slots, which are domestic demand-driven and higher in margin,” Sevidal said.
“Moreover, Bloomberry Resorts is the only pure play firm in the fastgrowing Philippine gaming sector.”
Bloomberry’s share price fell by 36 centavos last Friday to close at P9.76.