Financial services firm Nomura Group has raised its earnings estimates for Solaire Resort & Casino operator Bloomberry Resorts Corp by up to 39% after the company’s 3Q20 results, released earlier this week, suggested a faster than expected recovery.
Bloomberry reported a six-fold increase in gross gaming revenue at Solaire in the third quarter to Php4.4 billion (US$91.3 million), up from Php686.6 million (US$14.1 million) in 2Q20, after Philippines gaming regulator PAGCOR granted permission in August for Manila’s four integrated resorts to reopen at 30% capacity.
The improved GGR resulted in Bloomberry narrowing its EBITDA loss from Php2.0 billion (US$40.9 million) in the second quarter to Php203.7 million (US$4.2 million) in 3Q20.
In a Thursday note, Nomura Group Global Equity Research analysts Diane Nicole Go and Thomas Huang said Solaire’s third quarter results, which boosted GGR to around Php17.3 billion (US$356.8 million) for the first nine months of 2020, had seen Bloomberry already surpass their previous estimates of Php16.9 billion (US$348.5 million) for the full year.
As a result, Nomura has raised its FY21-22 Earnings Per Share estimates by 39% and EBITDA-based target price by 22% to Php8.30 per share. They have also raised GGR estimates for 2020, 2021 and 2022 by between 22% and 24% each, estimating a return to 65% of 2019 levels in 2021 and 85% by 2022.
The analysts noted that the potential addition of online gaming operations, recently approved by PAGCOR, could result in even greater pace of recovery although the exact impact remains unknown.
“In a recent announcement, casino regulator PAGCOR has allowed land-based casinos to accept online bets,” Nomura said.
“As per management, they have yet to get more clarity on the scope and details of online gaming from the regulator. The company believes that the segment may be a potential revenue stream but notes that this still remains in the development stage as laying out the infrastructure may take time, with complete rollout likely only in 1Q21/2Q21.
“In our view, this could help mitigate the impact of lost in-house revenues in the near term until casinos are allowed to regain full capacity (casino operations still constrained at 30% capacity by PAGCOR at present).”