The rejuvenation of the Philippines’ tourism sector in the coming year is poised to be a lucrative opportunity for Bloomberry Resorts Corp, the operator of Solaire Resort. While recent adjustments to earnings forecasts by Maybank Securities analyst Alexa Mae Carvajal reflect short-term challenges, a promising rebound in the VIP gaming segment is anticipated as international tourist numbers, especially from China, are expected to surge.
Earnings Forecast Adjustments:
Maybank Securities analyst Alexa Mae Carvajal has revised down the earnings forecast for Bloomberry Resorts Corp. The adjustments include a 13% decrease to Php10.8 billion (US$193 million) in FY23 and a 23% reduction to Php13.2 billion (US$236 million) in FY24. This downward revision is attributed to slower-than-expected revenue generation during the September 2023 quarter, affecting both the VIP and slots segments.
VIP Gaming Segment Recovery in 2024:
Despite the near-term challenges, Carvajal envisions a robust recovery in the VIP gaming segment in 2024. The catalyst for this recovery is anticipated to be the rebound in international tourist numbers, particularly from China. With last year’s arrivals still at 66% of pre-pandemic levels and a 2024 target of 7.7 million arrivals set by the Department of Tourism, a potential windfall for Bloomberry Resorts Corp is on the horizon.
Tourism Sector’s Impact on VIP Segment:
The further recovery of the tourism sector is expected to drive increased demand in the VIP gaming segment. Currently, foreign players predominantly hail from South Korea, Taiwan, Singapore, and Malaysia. The prospect of a surge in Chinese tourist arrivals presents a significant opportunity for Bloomberry Resorts Corp, with the potential to amplify growth in the VIP gaming segment.
Diversification Strategy and New Launch:
In the short term, Carvajal anticipates that the majority of Bloomberry’s growth will stem from the higher-margin mass and slots segments. The imminent launch of Solaire Resort North is expected to play a pivotal role in this growth strategy. With an additional 150 gaming tables and 2,500 slots, the new establishment will substantially augment Bloomberry’s gaming inventory, further solidifying its position in the market.
Positive Outlook Despite Forecast Adjustments:
Carvajal, despite the downward adjustments in earnings forecasts, emphasizes a positive outlook. The revised forecast still indicates a remarkable year-on-year growth of 109% in 2023 and 23% in 2024. This positive trajectory reinforces Maybank Securities’ ‘BUY’ recommendation on Bloomberry stocks, highlighting the company’s resilience and growth potential.
Considerations for Short-Term Growth:
While acknowledging the potential windfall from the VIP segment, Carvajal underscores that most of Bloomberry’s short-term growth is expected to be derived from the higher-margin mass and slots segments. The discretionary consumption-driven narrative of Bloomberry, especially with the foot traffic and tourism recovery, is anticipated to hold steady in FY24.
Mitigating Factors: Inflation Concerns and El Nino:
Addressing concerns about potential inflation upticks from El Nino, Carvajal remains optimistic about Bloomberry’s ability to navigate these challenges. The discretionary consumption-driven story, coupled with the recovery in foot traffic and tourism, is expected to mitigate the impact of external factors.
Bloomberry Resorts Corp stands at the intersection of short-term challenges and long-term opportunities. While adjustments to earnings forecasts reflect the intricacies of the current landscape, the anticipation of a tourism-driven surge in the VIP gaming segment and the strategic launch of Solaire Resort North position Bloomberry for sustained growth. Investors, buoyed by the positive outlook and growth potential, may find value in Maybank Securities’ ‘BUY’ recommendation for Bloomberry stocks.