Bloomberry Resorts Corporation FRI 14 AUG 2020

Extended quarantine period

leads to losses
Net loss of Php4.7 Bil reported for 2Q20. BLOOM reported a net loss of Php4.7 Bil for
2Q20 as doors remain closed to the public. Total GGR for the quarter was down 95.3% y/y,
resulting in a negative EBITDA of Php1.96 Bil. For the first half, BLOOM reported a net loss
BUY
of Php3.6 Bil, a reversal of the Php4.3 Bil income reported in 1H20. Loss for the first half is
already higher than COL and consensus full-year net loss forecast due to the longer than TICKER: BLOOM
expected closure of Solaire. FAIR VALUE: 8.00
Solaire remains closed due to quarantine protocols. For the most part of 2Q20, there CURRENT PRICE: 6.28
were not gaming operations held in Solaire. It was only in June 15 that relevant authorities UPSIDE (%): 27.39
have allowed Solaire to commence limited dry run gaming operations under the general
community quarantine (GCQ). Dry run operations involved only in-house and select invited
guests as was meant for BLOOM to fine tune its services in accordance with new normal
protocols. Solaire remains closed to the public. As such, Solaire GGR for 2Q20 declined SHARE PRICE MOVEMENT
95.3% y/y to Php687 Mil.
Reducing forecast on longer-than-expected quarantine period. We are reducing our
160

revenue and net income forecast to factor in the longer-than-expected quarantine period
150

of Metro Manila which was prevented Solaire from opening its doors to the public. We also 140

factor in further downside risk given that there is still no definite date as to when Solaire 130

will be able to resume operations. Given worse-than-expected impact of the COVID-19 120
pandemic to gaming operations and to the economy in general, we are also reducing our 110
2021 income forecast. Our new forecast for this year is for BLOOM to book a net loss of
Php6.1 Bil. For 2021, we still assume a recovery in demand and for BLOOM to book an
100

income of Php2.86 Bil. 90

80

FV estimate reduced to Php8.00, BUY maintained. In light of the reduction in 2020 and
14-May-20 14-Jun-20 14-Jul-20 14-Aug-20

2021 net income forecast, we reduce our FV estimate for BLOOM to Php8.00 from Php8.80. BLOOM PSEi

Despite the downgrade, we are maintaining our BUY rating on BLOOM. Being the leader in
the Philippine gaming space, BLOOM is positioned to capitalize on the recovery in demand
once quarantine measures are lifted. We still assume that we would see a gradual recovery
starting late this year going into 2021. ABSOLUTE PERFORMANCE
1M 3M YTD
FORECAST SUMMARY
BLOOM -17.48 14.18 -41.83
Year to December 31 (Php Mil) 2016 2017 2018 2019 2020E 2021E PSEi -1.55 7.47 -22.24
Revenues 27,590 33,022 38,220 46,337 17,609 34,972
% change y/y 10.2 19.7 15.7 21.2 -62.0 98.6
EBITDA 8,895 12,281 14,753 19,539 2,530 11,217
% change y/y 171.8 38.1 20.1 32.4 -87.1 343.4 MARKET DATA
EBITDA margin 32.2 37.2 38.6 42.2 14.4 32.1
EBIT 4,040 7,928 11,124 15,850 -1,160 7,527 Market Cap 68,827.21Mil
% change y/y - 96.2 40.3 42.5 -107.3 -749.0 Outstanding Shares 10,959,75Mil
EBIT margin 14.6 24.0 29.1 34.2 -6.6 21.5 52 Wk Range 4.03 - 11.19
Core net income 2,819 5,610 6,831 10,275 -6,087 2,859 3Mo Ave Daily T/O 46.12Mil
% change y/y - 99.0 21.8 50.4 -159.2 -147.0
Net profit margin 10.2 17.0 17.9 22.2 -34.6 8.2
EPS (cents) 0.21 0.55 0.65 0.90 (0.56) 0.25
% change y/y - 161.0 18.2 38.5 -161.9 -145.6

RELATIVE VALUE
P/E (X) 25.4 9.7 8.2 5.9 (9.6) 21.1
EV/EBITDA 9.9 7.1 5.9 4.5 34.6 7.8
P/BV (X) 2.4 1.9 1.6 1.3 1.5 1.5 Richard Lañeda, CFA
ROE (%) 9.6 20.0 19.6 21.9 (16.1) 7.0 Senior Research Manager
Dividend Yield (%) 0.0 0.0 1.9 1.9 1.9 1.9
richard.laneda@colfinancial.com
so urce: B LOOM , COL estimates

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
the COL Financial website as these may be subject to tampering or unauthorized alterations.
 EARNINGS ANALYSIS I BLOOM: EXTENDED QUARANTINE PERIOD LEADSTO LOSSES

FRI 14 AUG 2020

Net loss of Php4.7 Bil reported for 2Q20

BLOOM reported a net loss of Php4.7 Bil for 2Q20 as doors remain closed to the public.
Total GGR for the quarter was down 95.3% y/y, resulting in a negative EBITDA of Php1.96
Bil. For the first half, BLOOM reported a net loss of Php3.6 Bil, a reversal of the Php4.3 Bil
income reported in 1H20. Loss for the first half is already higher than COL and consensus
full-year net loss forecast due to the longer than expected closure of Solaire.

Exhibit 1. Results Summary

% of estimates
2Q19 2Q20 change 1H19 1H20 change
in Php Mil COL Consensus
Net revenues 11,540 896 -92.2% 22,231 10,255 -53.9% 58.2% 45.8%
EBITDA 4,955 -1,956 -139.5% 9,456 1,377 -85.4% 48.8% 28.7%
Reported net income 2,459 -4,695 -290.9% 4,275 -3,596 -184.1% 59.1% 101.7%

Source: BLOOM, COL estimates, Bloomberg

Solaire remains closed due to quarantine protocols

For the most part of 2Q20, there were not gaming operations held in Solaire. It was only
in June 15 that relevant authorities have allowed Solaire to commence limited dry run
gaming operations under the general community quarantine (GCQ). Dry run operations
involved only in-house and select invited guests as was meant for BLOOM to fine tune its
services in accordance with new normal protocols. Solaire remains closed to the public.
As such, Solaire GGR for 2Q20 declined 95.3% y/y to Php687 Mil.

Jeju Sun ceased gaming operations since March

BLOOM’s Korea unit registered no gaming revenues in 2Q20 as Jeju Sun was temporarily
closed starting March 21, 2020 in response to the COVID-19 pandemic. Jeju Sun availed
of the government aid to the tourism industry that partially covers payroll costs of eligible
companies.

COL Financial Group, Inc. 2

 EARNINGS ANALYSIS I BLOOM: EXTENDED QUARANTINE PERIOD LEADSTO LOSSES

FRI 14 AUG 2020

Reducing forecast on longer-than-expected quarantine

period

We are reducing our revenue and net income forecast to factor in the longer-than-
expected quarantine period of Metro Manila which was prevented Solaire from opening
its doors to the public. We also factor in further downside risk given that there is still no
definite date as to when Solaire will be able to resume operations. Given worse-than-
expected impact of the COVID-19 pandemic to gaming operations and to the economy
in general, we are also reducing our 2021 income forecast.

Our new forecast for this year is for BLOOM to book a net loss of Php6.1 Bil. For 2021,
we still assume a recovery in demand and for BLOOM to book an income of Php2.86 Bil.

Exhibit 2. Adjustments in 2020 and 2021 forecast

2020E 2021E
change change
in Php Mil Old New Old New
GGR 34,184 13,880 -59.4% 48,376 46,261 -4.4%
EBITDA 5,163 2,530 -51.0% 12,232 11,217 -8.3%
EBIT 1,473 -1,160 -178.7% 8,543 7,527 -11.9%
Net income -3,454 -6,087 76.2% 3,874 2,859 -26.2%
Source: COL estimates

FV estimate reduced to Php8.00, BUY maintained

In light of the reduction in 2020 and 2021 net income forecast, we reduce our FV estimate
for BLOOM to Php8.00 from Php8.80. Despite the downgrade, we are maintaining our BUY
rating on BLOOM. Being the leader in the Philippine gaming space, BLOOM is positioned
to capitalize on the recovery in demand once quarantine measures are lifted. We still
assume that we would see a gradual recovery starting late this year going into 2021.

COL Financial Group, Inc. 3

 EARNINGS ANALYSIS I BLOOM: EXTENDED QUARANTINE PERIOD LEADSTO LOSSES

FRI 14 AUG 2020

Bloomberry Resorts INCOME STATEMENT (PHPMIL)

Corporation (BLOOM) Revenues

2016
27,590
2017
33,022
2018
38,220
2019
46,337
2020E
17,609
2021E
34,972
% Growth 10.2% 19.7% 15.7% 21.2% -62.0% 98.6%
COMPANY BACKGROUND Adjusted EBITDA 8,895 12,281 14,753 19,539 2,530 11,217
Bloomberry Resorts Corporation develops % Growth 171.8% 38.1% 20.1% 32.4% -87.1% 343.4%
Adjusted Operating Profit 4,040 7,928 11,124 15,850 (1,160) 7,527
tourist facilities, casino entertainment, and
% Growth -355.1% 96.2% 40.3% 42.5% -107.3% -749.0%
hotel and amusement-themed projects.
Interest Expense 2,223 2,152 4,582 5,562 5,168 4,920
Bloomberry Resorts Corporation owns Other Income/(Expense) (506) (948) (499) 29 (291) (291)
and operates Solaire Resort and Casino Net Income 2,357 6,071 7,188 9,955 (6,087) 2,859
which is one of the four license holders in % Growth -170.1% 157.5% 18.4% 38.5% -161.1% -147.0%
Entertainments City. Solaire is currently the EPS 0.21 0.55 0.65 0.90 (0.56) 0.25
% Growth -169.1% 161.0% 18.2% 38.5% -161.9% -145.6%
leading integrated resort in the Philippines.
Bloomberry also owns and operates Jeju BALANCE SHEET (IN PHPMIL)
Sun Hotel and Casino in Jeju, Korea. 2016 2017 2018 2019 2020E 2021E
Cash & Equivalents 14,326 21,961 36,466 74,718 65,359 59,940
REVENUE BREAKDOWN Receivables 2,958 2,283 2,806 5,207 1,979 3,930
Other Current Assets 1,233 1,662 1,194 1,254 1,317 1,383
Restricted cash - net of
2,252 2,251 - - - -
8% 9% current
PPE andportion
Investment
Properties 44,491 42,471 82,700 90,425 94,150 97,876
8% 9%
2,256 2,158 2,483 2,509 2,537 2,566
Other Non-Current Assets
% 9%
Total Assets
Payables and other 67,515 72,786 125,649 174,113 165,342 165,693
current liabilities 8,771 9,246 16,929 18,622 20,484 22,532
ST Debts 1,714 2,727 2,068 2,205 2,205 2,205
Other Current Liabilities 1 2 4 4 4 4
LT Debts 32,112 29,373 69,119 106,914 103,498 100,083
Other Non-Current
772 1,153 969 988 1,008 1,029
Liabilities
92% 92% Total Liabilities 43,370 42,501 89,088 128,732 127,199 125,853
92% Total Equity 24,144 30,285 36,561 45,381 38,143 39,841
Hotel, food and beverage Gaming Total Liabilities & Equity
Retail and others
67,515 72,786 125,649 174,113 165,342 165,693
Hotel, food and beverage Gaming Retail and othersBVPS 2.19 2.75 3.32 4.12 3.46 3.62
Gaming Retail and others
CASHFLOW STATEMENT (IN PHPMIL)
2016 2017 2018 2019 2020E 2021E
Pretax Income 3,982 6,295 7,039 10,109 (6,037) 2,899
Depreciation & Amortization 4,855 4,354 3,629 3,690 3,690 3,690
Other Non-Cash Exp (Gains) (233) (225) (22) - - -
Interest Expense (Income) 2,179 2,085 4,441 5,853 5,459 5,211
Decrease (Increase) in Working Cap -3,001 846 7,358 -748 5,048 53
Operating Cash Flow 6,353 13,420 22,527 18,425 7,769 11,461
Capex -1,481 -1,802 -43,801 -9,720 -4,727 -4,535
Decrease (Increase) in other investments 158 -31 1,947 -26 -28 -29
Investing Cash Flow -1,322 -1,832 -41,854 -9,746 -4,755 -4,564
Proceeds (Payment) Debts -3,283 -1,882 38,670 37,932 -3,416 -3,416
Net proceeds from issuance of capital stock 0 0 0 0 0 0
Interest Paid -2,109 -2,049 -3,604 -7,257 -7,856 -7,800
Others -46 0 -1,300 -1,101 -1,101 -1,101
Financing Cash Flow -5,437 -3,931 33,766 29,574 -12,373 -12,316
Change in Cash -170 7,636 14,504 38,252 -9,359 -5,419

COL Financial Group, Inc. 4

 EARNINGS ANALYSIS I BLOOM: EXTENDED QUARANTINE PERIOD LEADSTO LOSSES

FRI 14 AUG 2020

INVESTMENT THESIS: RATIOS

2016 2017 2018 2019 2020E 2021E
Beneficiary of growing gaming sector
EBITDA Margin (%) 32.2% 37.2% 38.6% 42.2% 14.4% 32.1%
The local gaming sector is still in a growth
OPM (%) 14.6% 24.0% 29.1% 34.2% -6.6% 21.5%
phase and Bloomberry, the operator NPM (%) 8.5% 18.4% 18.8% 21.5% -34.6% 8.2%
of Solaire Resort and Casino, is a main Times Interest Earned (X) 1.8 3.7 2.4 2.8 -0.2 1.5
beneficiary of the trend. Solaire Resort and Current Ratio (X) 1.77 2.16 2.13 3.90 3.03 2.64
Casino is one of four integrated resorts in Net D/E Ratio (X) 0.81 0.34 0.95 0.76 1.06 1.06
Entertainment City and once all four are Days Receivable 39.1 25.2 26.8 41.0 41.0 41.0
Asset T/O (%) 40.9% 45.4% 30.4% 26.6% 10.7% 21.1%
completed, Philippines will make a better
ROAE (%) 10.3% 22.3% 21.5% 24.3% -14.6% 7.3%
case as a regional gaming destination,
which will benefit all operators.
MAJOR CORPORATE DEVELOPMENTS (5-YEARS)

Leader in the Philippine gaming sector Acquisition of 92% of Golden & Luxusy Co. Ltd., a hotel and casino operator
12/31/2015
Bloomberry is the leader in the Philippine in Jeju Island
gaming sector as Solaire has the most
gross gaming revenues (GGR) among the
four integrated resorts. In 2016, the GGR of
Solaire accounted for 44% of total GGR of
integrated resorts.

KEY RATIOS (IN PHPMIL)

COL Financial Group, Inc. 5

 EARNINGS ANALYSIS I BLOOM: EXTENDED QUARANTINE PERIOD LEADSTO LOSSES

FRI 14 AUG 2020

Valuation RELATIVE VALUATION

Methodology
EV/EBITDA EBTIDA growth
2020E 2021E 2020E 2021E
Bloomberry Resorts 34.6 7.8 -87.2% 343.4%
Wynn Macau 11.8 9.0 -26.4% 31.9%
Sands China 22.5 12.0 -49.5% 88.4%
MGM China 14.8 9.6 -45.4% 53.7%
Galaxy Entertainment 20.3 11.8 -40.9% 72.6%
Melco Resorts 17.4 7.5 -57.2% 133.3%
Crown Resorts 12.8 11.8 -40.7% 8.7%
Star Entertainment 9.4 9.4 -37.6% 0.1%
Industry Average 18.0 9.9 -48.1% 91.5%
Industry Median 16.1 9.5 -43.2% 63.2%

VALUATION ASSUMPTIONS

DCF valuation
Risk Premium 9.0%
Risk Free Rate 4.0%
Beta 1.2
Cost of Equity 14.8%
Cost of Debt 7.5%
Tax Rate 0.0%
WACC 11.2%
Terminal Growth Rate 0.0%

PV of cash flows 98,600

Value of land 16,200
Enterprise value 114,800
Net debt -27,247
Net asset value 87,553
O/S 11,009
FV Estimate (Php) 8.00

COL Financial Group, Inc. 6

 EARNINGS ANALYSIS I BLOOM: EXTENDED QUARANTINE PERIOD LEADSTO LOSSES

FRI 14 AUG 2020

I MP OR TA NT R AT ING DEFINITIONS
BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the
next six to 12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might
be poor or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the
next six to twelve months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

I MP OR TA NT DISC L AIM ER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may
be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are
subject to change without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of
a security. COL Financial and/or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies
mentioned in this report and may trade them in ways different from those discussed in this report.

C O L R E S EAR C H T EAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

C O L F INANC IAL G R O UP, I NC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 7