Bloomberry Expects High-Rollers to Fuel Double-Digit JumpIan Sayson
Bloomberry Resorts Corp., the world’s second-best performing casino stock, expects at least 10 percent annual growth in gaming volume as its Solaire Resort & Casino in Manila brings in more high rollers from Asia.
“Gaming volumes have grown very nicely,” with both VIP and mass-market gambling showing “double-digit” gains while operating margins have “strongly” improved, Bloomberry President Thomas Arasi said in an interview, without giving specific figures. “We expect those trends to continue.”
Solaire’s international business has increased, boosting VIP operations at the 14-month-old casino, Arasi said. From “substantially” less than half of gambling revenue last year, the share generated by VIP clients has risen to “close to parity” with mass-market gaming, he said. The $1.2 billion Solaire project is the first of four resorts to open in the 120-hectare (297-acre) Entertainment City, a Las Vegas-style complex the Philippines is building to compete with Macau and Singapore in Asia’s gambling market.
“The more VIPs and high rollers they get, the better for them,” said Noel Reyes, chief investment officer at Security Bank Corp., which had $823 million in assets under management in 2013. “It would take a longer time to recover those investments if it relies on the local market. It needs foreign players.”
Solaire may need an international partner to grow further, Reyes said.
Bloomberry’s shares have rallied 38 percent this year, the second-biggest gain among 26 global casino operators tracked by Bloomberg. The stock rose as much as 4.2 percent in Manila today, headed for the biggest gain since April 24.
Junket operators have provided Solaire a “stable business” since the middle of the fourth quarter, said Arasi, who was hired in October after Bloomberry fired Las Vegas-based Global Gaming Asset Management as its casino operator on allegations it didn’t meet obligations in their agreement.
Bloomberry, owned by Philippine billionaire Enrique Razon, has signed up 47 junket operators. The operators help fill the VIP area with high rollers, and the casino frequently operates at capacity for premium players, Arasi said.
“It now happens fairly often, particularly on weekends,” said Arasi, a former president at Singapore’s Marina Bay Sands. “We could use more space.”
Solaire, which has 295 tables and 1,400 slot machines, had 7.1 billion pesos ($162 million) in gross gaming revenue in the first quarter, 27 percent more than in the fourth quarter. Bloomberry’s first-quarter profit reached 1.46 billion pesos, compared with a year-earlier 1.06 billion-peso net loss that included pre-operating expenses and only two weeks of casino operations.
’’It’s too early to say that the first quarter is an indication that Solaire is already on solid ground,’’ said James Lago, head of research at PCCI Securities Brokers Corp. “Solaire has to deliver at least a similar performance in the second quarter.”
Bloomberry shares fell 35 percent in 2013, trailing a 1.3 percent gain in the nation’s benchmark Philippine Stock Exchange Index, as Solaire’s fledgling operation struggled to ramp up its international VIP business.
Solaire’s VIP gaming area will double following its $500 million expansion, according to Bloomberry. The project, to be completed in the fourth quarter, includes 6,000 square meters (65,000 square feet) of VIP gambling space with 65 tables, a 300-suite boutique hotel, a 1,700-seat theater and 5,000 square meters of retail shops.
City of Dreams
The resort now has 115 tables for high-stakes gamblers, 488 rooms and 15 restaurants and food and beverage outlets.
The additional VIP gaming area will target higher-end players from overseas, Arasi said. Solaire’s high rollers come from China, Hong Kong, Macau, Japan, Taiwan, Malaysia, Singapore, Thailand and Indonesia, and the company is starting to tap Vietnam, he said.
City of Dreams Manila, a venture of Melco Crown Entertainment Ltd. and Philippine billionaire Henry Sy, is slated to open in the fourth quarter of this year and will be the second integrated resort to open in Entertainment City. While the new casino will bring competition for Solaire, it will expand the nation’s gaming market and help attract more players from the region, Arasi said.
Entertainment City’s two remaining licenses are held by Japanese gaming magnate Kazuo Okada and a venture of Genting Hong Kong Ltd. and Philippine billionaire Andrew Tan. The properties are scheduled to open between 2015 and 2017.