Latest Stories

PH gaming seen to surpass Singapore’s

Big population, spillover of VIPs to fuel growth


The Philippines’ burgeoning gaming industry may surpass Singapore’s $5.6-billion gaming market by 2018 on the back of favorable local demographics and a likely spillover of foreign high-rollers, foreign bank Credit Suisse said.

In a new equity research dated Feb. 27, Credit Suisse initiated coverage on the Philippine gaming sector with a rosy outlook of a 28-percent compounded annual growth rate (CAGR) for the industry over the 2012-2018 period. The bank’s outlook, however, was less aggressive compared to the state-owned Philippine Amusement and Gaming Corp.’s goal of attaining $10 billion in annual gaming revenues by 2017.

“We view the Philippines as having a potentially larger domestic market in the high-margin mass segment compared to other Asian gaming hubs on the back of favorable demographics,” the report said, noting that the Philippine population of 97 million was almost thrice that of Singapore, Malaysia and Macau combined.

Credit Suisse pointed out that the Philippines also had the fastest growing working-age population in emerging Asia, projected to grow by more than 2 percent annually over the next 10 years. Accelerating wage growth, signs of increased spending power and consumer confidence at near-record highs all pointed to favorable demand prospects, the research said.

It also noted that limited hotel capacity and the absence of new casinos elsewhere in the region until 2015 could result in a spillover of foreign VIPs (very important persons) into local shores.

Overall, the research sees a longer sustained growth for the Philippines compared to Singapore due to stronger junket participation and a protracted novelty effect.

“Note that the VIP market in Singapore is primarily in-house, heavily reliant on credit directly extended by the casino to VIP clients. We believe that this reliance on the in-house/direct VIP segment stems from the difficult operating environment for junkets in Singapore. As a result, Singapore casinos bear the brunt of the credit risk in running the VIP business, as opposed to sharing the risk with junket operators,” the research said.

“We believe that Philippine casinos will be able to draw stronger participation from junkets—and consequently provide a more stable supply of credit to VIP clients—as lower tax rates in the country will allow for higher commissions to be paid to junket operators. Moreover, based on our channel checks, the regulatory environment in the Philippines appears much more conducive to junket operations as compared to Singapore,” it said.

Given this gaming outlook, Credit Suisse initiated coverage on two listed gaming stocks, Bloomberry Resorts Corp. and Belle Corp., with “outperform” ratings and target prices of P17.50 and P6.50, respectively.

Credit Suisse projected a strong earnings CAGR of 38 percent for Bloomberry and 68 percent for Belle from 2013 through 2016, much like in the early years of Singapore casinos. The implied price-to-equity ratio for both stocks (2014 P/E multiple of 20x for Bloomberry and 30.8x for Belle) are below the 33.3x pre-operating P/E of Genting Singapore Plc, which the research said provided a better benchmark than more mature regional peers.

A P/E ratio of 20x means that investors are paying 20 times the amount of money they are expected to make for that year.

In the near- to medium-term, the research said the growth in Philippine gaming would be driven by the increase in capacity, with new casinos coming on stream through 2016. Bloomberry’s Solaire is expected to open by March this year while Belle Grande, a partnership between the SM group and Macau’s Melco Crown, is expected to open in the first half of 2014.

Credit Suisse said Bloomberry and Belle could start enjoying positive free cash flow by 2014 and attain a net cash position by 2015.

“We expect Philippine casinos to exhibit higher profitability than regional peers in non-Macau Asia on the back of a more favorable cost structure,” the report said. Although tax rates on gaming revenues are lower in Singapore than in the Philippines, the report noted that Singapore casinos are also taxed at the bottom-line whereas gaming profits of Philippine casinos are not, while Malaysia casinos are likewise taxed at the bottomline, on top of having a higher effective tax rate on gaming revenues compared to the Philippines.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Bloomberry Resorts Corp. and Belle Corp. , Business , Credit Suisse , Gaming , Philippines , Singapore

  • http://profile.yahoo.com/AND7MQ5FERICDOIAUW56RYT45A tower_of_power

    Hahahaha …. kung sa bagay halos lahat ay naguumpisa sa dream … our problem is puro na lang tayo dream … dream … dream …. tapos kung maattain na … hindi alam kung ano gagawin para manatili sa taas … kaya nga popular ang ningas cogon attitude sa atring mga pinoy!!!

  • titolim

    tong it’s na lang kayo at balat ng sigarilyo ang peraperahan para walang mabaon sa utang.

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Obama, family cause a small stir at Easter service
  • Estrada: Gigi Reyes won’t testify vs JPE
  • Ancient enigmatic carvings in danger of disappearing
  • Tagle: Hope comes with warning on Easter
  • New plant to boost supply of clean energy
  • Sports

  • Goodbye MGM, Las Vegas for Pacquiao?
  • Rain or Shine drops Ginebra in big hole
  • Ateneo whips CSB; Davao debuts with win over FEU
  • PH pug Hipolito Banal decisions Colombian in Aiba
  • Former Pacquiao sparmate Porter keeps IBF title
  • Lifestyle

  • Transitions and resurrection in the performing arts
  • ‘Archaeology tour’ of Cebu’s heritage of faith
  • Historic Fort Bonifacio tunnel converted into a septic tank
  • ‘Imports’ from London, and play of the year
  • Korean animation comes of age
  • Entertainment

  • Easter musings
  • Solenn in shorts
  • Unmerry mix of attention-calling moves on ‘Mini-Me’ TV tilts
  • Persistence pays off for The 1975
  • Special section in LA fest for Filipino films
  • Business

  • BDO seen keen on bidding for Cocobank
  • Bataan freeport investment pledges up 1,302%
  • Golden Week
  • Bourse to woo Cebu stock mart investors
  • Supper power
  • Technology

  • Nasa’s moon-orbiting robot crashes down
  • Netizens pay respects to Gabriel Garcia Marquez
  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Facebook rolls out ‘nearby friends’ feature
  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Opinion

  • Gigi’s home
  • Palace stonewalls on MRT inquiry
  • Couple of things too
  • There is plenty of water behind Wawa Dam
  • Triduum thoughts of a young boy
  • Global Nation

  • Search for Etihad passengers launched
  • Japan presents $57-B ‘dream plan’ to solve Metro congestion
  • Tim Tebow’s charity hospital in Davao seen to open in 7 months
  • OFW died of Mers-CoV in Saudi Arabia, says family
  • Aquino, Obama to tackle US pivot to Asia during state visit
  • Marketplace