Maybank has revised its net revenue forecasts for Bloomberry Resorts Corporation, lowering its projections by 12 percent for both FY24 and FY25, now estimating PHP51.0 billion ($870 million) and PHP60.3 billion ($1.03 billion), respectively.
This revision is attributed to weaker-than-expected gaming gross revenues (GGR) from Entertainment City, despite an overall 25 percent year-on-year (YoY) growth in the local gambling industry during the first half of 2024.
The investment bank continues to maintain its “Buy” rating on Bloomberry stock but has revised its earnings expectations, forecasting a 30 percent YoY decline to PHP6.7 billion ($114 million) in FY24, followed by a strong 75 percent YoY increase to PHP11.7 billion ($200 million) in FY25.
Maybank notes the uneven growth within the gaming industry in the country, highlighting that while the overall Philippine gambling sector has seen robust growth, largely driven by electronic gaming (e-games), the performance of traditional gaming operations in Entertainment City has been lackluster. GGR from SEC was down 13 percent YoY in the first half of 2024, primarily due to fewer Chinese VIP players, who have historically contributed significantly to the region’s gaming revenues.
According to an investment memo on Monday, despite the short-term weakness in SEC, Maybank sees a promising outlook for Bloomberry as the company continues to focus on its mass gaming segment through its Solaire Resort North property, which is expected to perform better in the coming year.
The $1 billion property, Solaire Resort North, officially opened on May 25th of this year. The group had previously revealed the ramp-up of Solaire Resort North, which achieved a positive EBITDA of PHP250 million ($4.32 million) in its first 37 days of operation.
Loan refinancing enhances cash flow
Bloomberry’s recent loan refinancing is expected to boost its cash flow, which could help the company navigate short-term challenges. On October 15th, 2024, Bloomberry, the operator of Solaire Resorts, secured a PHP72 billion ($1.24 billion) syndicated loan refinancing facility, replacing outstanding balances from previous term loans. The new facility comes with a 10-year term and a back-ended principal payment structure, with over 65 percent of the principal due in the last five years.
The loan is priced 75 basis points lower than its previous loans and includes an option to fix the interest rate within the next 12 months, allowing Bloomberry to benefit from any future interest rate cuts. This refinancing is expected to reduce debt service pressures and provide more financial flexibility, particularly as the company’s SRN property ramps up operations.
Despite recent setbacks, including a 40 percent decline in Bloomberry’s share price from its March 2024 peak of PHP12.00 ($0.20) to PHP7.16 ($0.12), Maybank sees this as a potential buying opportunity. The investment bank cites the stock’s current value, trading at a measure of EV/EBITDA below its historical average.
