Maybank has downgraded its rating for Bloomberry Resorts, a top Philippines land-based casino operator, to ‘Hold’, while cutting its revenue projections for both 2024 and 2025.
This move reflects key risks to the company’s performance, including the ongoing weakness in Solaire Entertainment City’s gaming revenue, driven by a decline in both VIP and domestic Chinese players. Furthermore, analysts note that Bloomberry Resorts faces increased competition from new casino developments and the growing prominence of e-gaming, which could further pressure its profitability.
In its latest update, released on Wednesday, Maybank outlined several challenges Bloomberry Resorts is expected to face in 2025, particularly at its Solaire Entertainment City casino. The company is anticipated to experience continued weakness in this segment, though the full-year contributions from the recently opened Solaire Resort North and the potential launch of an e-gaming platform in the third quarter of 2025 may offer some offset. However, Maybank has not yet factored the impact of the e-gaming platform into its forecast.
Solaire Resort North, a new luxury development in Quezon City, officially opened on May 25th, 2024, and is expected to play a key role in the company’s performance going forward.
In light of its revised earnings outlook, analyst Raffy Mendoza has lowered its consolidated net revenue forecasts for Bloomberry Resorts by 2 percent for FY24 and 17 percent for FY25.
Maybank now expects Bloomberry Resorts’ FY24 net income to decline by 71 percent, with a modest 4 percent recovery projected for FY25.
The revised FY25 revenue forecast now stands at PHP50.1 billion ($857 million). Alongside this, the firm has raised its operating expense estimates, primarily due to increased depreciation and higher selling and advertising costs.
Despite a significant drop in the company’s share price—down 42 percent to PHP4.46—Maybank indicates that Bloomberry Resorts’ stock is currently trading at an FY25E EV/EBITDA multiple of 7.4x, slightly above the regional peer average of 7.0x. This suggests that the stock is fairly valued, with limited upside potential. Maybank’s revised target price implies an EV/EBITDA of 7.7x, indicating minimal further gains.
3Q24 performance signals risks ahead
Bloomberry Resorts’ latest financial update in November signaled further risks, as in 3Q24, despite the group’s GGR reaching PHP16.26 billion ($277.11 million), the company registered a loss of PHP470 million ($8.01 million) due to higher depreciation and interest expenses.
Both Entertainment City and Solaire North saw declines in their performance during 3Q24. At Entertainment City, VIP rolling chip volume dropped by 25 percent year-on-year to PHP109.8 billion ($1.87 billion), while VIP GGR fell by 10 percent to PHP3.6 billion ($61.36 million).
At Solaire North, VIP rolling chip volume was PHP2.2 billion ($37.5 million), but VIP GGR turned negative, recording a loss of PHP19 million ($323,800).
At that time, Enrique Razon Jr., Bloomberry’s Chairman and CEO, highlighted that the business environment in Entertainment City remained challenging due to a decline in gaming volumes.
However, he noted that the gaming volumes from their Quezon City property more than compensated for this weakness, leading to a 22 percent year-on-year increase in total Philippine gaming revenues for the quarter. He also emphasized that after its first full quarter of operations, Solaire North’s ramp-up was still on track.
