SM group gains control of casino holding firm

The SM group has gobbled up shares of gaming investment holding Premium Leisure Corp. (PLC) from the open market, cementing control of the publicly listed company that owns half of the casino business of integrated resort City of Dreams Manila.

On Tuesday, some 269.76 million shares of PLC changed hands at the stock market at P1.20 per share through a special block sale. The total block was worth P323.71 million.

Asked about the transaction, PLC chair Willy Ocier said the buyer of the block was the SM group while the seller was a foreign entity.

Prior to this transaction, the SM group already owned 128.27 million direct shares or 0.406 percent of PLC, based on the company’s list of top stockholders as of the end of 2016.

The Sy family also controls the majority of Belle Corp., which owns 78.745 percent of PLC.

“Maybe it signals a bottom for the stock because the owners are buying more,” said stock broker Joseph Roxas, president of Eagle Equities Inc.

Shares of PLC have not risen as fast as those of its peers, possibly due to the vast number of shares that were outstanding, Roxas said.

The company has 31.626 billion in total issued and outstanding shares. As of Wednesday, it was valued by the stock market at about P42 billion.

PLC owns half of the gaming operations of City of Dreams Manila in partnership with Melco Crown group of Macau. The integrated resort opened in December 2014.   PLC also controls the majority of Pacific Online Systems Corp. (POSC), which brokers technology from global suppliers of integrated gaming systems and leases to Philippine Charity Sweepstakes Office the equipment needed for its online lottery operations.

Melco earlier said COD Manila had seen a surge in gaming revenue in the quarter ending December 2016, benefiting from the increase in foreign travelers to the country. Net revenue  in the last quarter of 2016 rose by 78.9 percent year-on-year to $144.7 million.

Due to higher casino revenues, COD Manila generated a cash flow of $50.2 million for the fourth quarter, more than tripling the $15.5 million cash flow in the same quarter in 2015.

In the case of COD Manila, the strong growth of gaming revenue was attributed to both higher volume and high “win” rate.

A casino’s “win” or “hold” rate is based on the element of luck but is also affected by the spread of table limits, a player’s skill and resources and amount of time spent in the casino.  While it is said that the house always wins, it sometimes wins more and sometimes less than the statistical probability.

Rolling chip volume surged to $2.1 billion in the fourth quarter from only $1.3 billion in the previous year.  COD’s “win rate” also improved to 3.5 percent compared to 2.1 percent year-on-year.  This stood much better than the expected rolling chip win rate range of 2.7 to 3 percent.

Mass market table games “drop” or bets increased to $149 million for the quarter versus $106.3 million in the same period last year.  CoD’s win rate in the mass market table games stood at 27.8 percent in the fourth quarter versus 27.5 percent year-on-year.

Gaming machine handle – referring to “coin in” or the amount of money played through electronic gaming devices—likewise expanded to $671.3 million for the fourth quarter compared to $420.9 million year-on-year.  The win rate in this segment, however, was lower at 5.9 percent compared to 6.2 percent in the fourth quarter of 2015.