Error message

  • Notice: Trying to get property of non-object in template_preprocess_imageblock_content() (line 349 of /home/agbrief/agb/sites/all/modules/imageblock/imageblock.module).
  • Notice: Trying to get property of non-object in template_preprocess_imageblock_content() (line 349 of /home/agbrief/agb/sites/all/modules/imageblock/imageblock.module).

Bloomberry to see mixed impact from land purchase: MS

Bloomberry Resorts would see its debt levels rise and a reduction in return on invested capital in the short term if it buys the land on which its Solaire Resort & Casino is based, though longer term it may improve valuations, according to Morgan Stanley.

Market regulator, the Philippine Amusement & Gaming Corp., earlier this week said it planned to auction off the land, setting a minimum bid of P37 billion ( $740 million). Offers are due by Nov. 27.

If Bloomberry decides to buy at the minimum price, the company’s net debt will rise by P37 billion from P8.3 billion at the end of the Q3. The purchase would cut return on invested capital to 15 percent from an estimated 24 percent this year and may also eat into the expected dividend level for next year, the firm said in a research note.

If half of the purchase is funded through debt, its interest expenses will rise by P900 million cutting net income and free cash flow to equity.

“The saving of lease payment of PP250mn per annum (till July 2033), which is 2 percent of 2017e EBITDA, is not material in our view,” Morgan Stanley says.

However, on the flip side, if the company continues to lease, the annual payments may end up increasing by as much as 9 times, reducing 2018 EBITDA estimates by 13 percent.

Morgan Stanley also notes that given rising land values in the Philippines, owning the land may actually improve the company’s market valuation. Land in the country has risen by 6 to 7 times in the past five years from P28,000 per sqm to P200,000. It also points out that Boyd Gaming in the U.S., which owns the land on which its casinos are based, trades at a higher valuation than Penn National Gaming, which spun off its real estate assets.

Casinos in Macau and Singapore do not own the land on which their IRs are based, while Melco Resorts also leases land in Manila. Resorts World Manila and Okada Manila own the land.

More news from this jurisdiction

PhilippinesMonday, Jan 15, 2018

A retired military general is set to fill the position left by Philippine Charity Sweepstakes Office (PCSO) chairman, Jose Jorge Corpuz, who retired last week.

PhilippinesSunday, Jan 14, 2018

President Rodrigo Duterte on Thursday held a meeting with the top executives of Melco Resorts and Entertainment.

PhilippinesSunday, Jan 14, 2018

Chairman of the Philippine Charity Sweepstakes Office Jose Jorge Corpuz has resigned from his position as chairman, according to an announcement on Friday.

PhilippinesThursday, Jan 11, 2018

Philippine Amusement and Gaming Corporation (PAGCOR) has launched a second auction for two parcels of land occupied by Bloomberry’s Solaire Resort and Casino.

PhilippinesThursday, Jan 11, 2018

Philippine police have rescued a Taiwanese man from a kidnap-for-ransom gang in Paranaque City, local media reports.

PhilippinesMonday, Jan 08, 2018

The Philippines’ national tax think-tank has recommended an increase in the entrance fees required for players to enter casinos in the country, and to make their collection compulsory.

PhilippinesSunday, Jan 07, 2018

Philippine casino operator Travellers International Hotel Group has announced it has formalized an agreement with Hotel Okura Co., Ltd for it to operate a new 191-room hotel at Resorts World Manila.