{"id":324592,"date":"2023-08-24T00:11:44","date_gmt":"2023-08-23T16:11:44","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324592"},"modified":"2023-08-24T00:11:46","modified_gmt":"2023-08-23T16:11:46","slug":"stock-in-focus-bloomberry-resorts-corp-bloom-24-aug-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-bloomberry-resorts-corp-bloom-24-aug-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Bloomberry Resorts Corp. (BLOOM) – 24 Aug 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>BLOOM<\/td><\/tr>
Company Name<\/strong><\/td>Bloomberry Resorts Corp.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>24 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 14.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We raise our target price (TP) for BLOOM from Php12.60 to Php14.00 as we rolled over our EV\/EBITDA valuation. Our revised Target Price is based on an EV\/EBITDA of 9.0x, halfway from BLOOM\u2019s current EV\/12m forward EBITDA of 7.7x and the regional peer average EV\/EBITDA of 10.3x. With the sharp drop in BLOOM\u2019s share price recently, the potential upside has become even more compelling at 30%. Hence, we reiterate our BUY rating.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Net income at Php6.4 billion, 160% higher year-on-year (y\/y)<\/strong><\/p>\n\n\n\n

BLOOM reported 1H 2023 net income of Php6.4 billion, 160% higher y\/y. Excluding the one-time gain on the sale of property and equipment in Jeju Sun, core net income was at Php6.1 billion (+145% y\/y), better than expected, representing 57% of our 2023 forecast. <\/p>\n\n\n\n

Net revenues jumped 48% y\/y to Php25.6 billion. Gross gaming revenues (GGR) rose by 41% to Php31.2bn as VIP GGR was 57% higher at Php11.1 billion. Mass and Slot GGRs advanced by 25% and 44% respectively. Non-gaming revenues also surged by 51% y\/y with hotel\/F&B and retail\/others growing by 57% and 33%, respectively. Note that hotel occupancy rate improved to 78.5% in 1H 2023 from 38.8% in 1H 2022.<\/p>\n\n\n\n

Hold rates normalizing while drop volumes continue to grow<\/strong><\/p>\n\n\n\n

BLOOM\u2019s total 2Q 2023 GGR climbed 15% y\/y to Php15.1 billion, primarily from VIP\/Mass\/Slot drop volumes growing by 47%\/43%\/17%. However, on a q\/q basis, BLOOM\u2019s 2Q 2023 total GGR declined by 6% in spite of the 4% increase in total drop volumes. This was primarily from the normalization of holding rates. The VIP segment took the most hit as its GGR plunged by 26% q\/q on a 1.1-ppt drop in holding rate to 2.73% (versus the normalized rate of 2.85%) notwithstanding the 3% q\/q increase in rolling chips. <\/p>\n\n\n\n

On the bright side, Mass and Slot GGRs grew by 3% and 13% q\/q, respectively. Although the mass hold rate plummeted by 2.6ppts q\/q to 37.9% (closer to pre-pandemic levels of 30-35%), its drop volumes rose by 10% q\/q. Meanwhile, the Slot machine holding rate expanded by 30bps q\/q to 6.0%, which neared its 6.5% historical average. Its drop volumes also grew by 7%. Management attributed the higher volumes to the improved foot traffic in Solaire along with increased marketing spend.<\/p>\n\n\n\n

Outlook<\/strong>
We expect BLOOM to hit our estimates as we have already accounted for the normalization of holding rates for 2023 and 2024. We believe drop volumes can sustain their momentum for the rest of the year as the presence of the Chinese players in GGRs is yet to come in. Management also sees the trend continuing based on July and August data.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>