Bloomberry Resorts Corporation FRI 24 APR 2020

Balance sheet strong enough

to handle the worst
Ample liquidity for at most two years. With BLOOM’s flagship casino Solaire Resort and
Casino closed since March 15 because of the government-ordered enhance community
quarantine (ECQ), one of the main concerns is how long BLOOM can stay liquid. BLOOM
BUY
expressed confidence that they have enough liquidity to last at most two years as it has
TICKER: BLOOM
Php42 Bil in cash. Conservatively speaking, the estimated cash burn per day is around Php28
Mil which includes utility, salaries, maintenance, office expenses, and other fixedcosts. FAIR VALUE: 8.10
BLOOM also mentioned that they did not reduce employee headcount during this difficult CURRENT PRICE: 5.50
time. Meanwhile, total interest and principal payments for its Php73.5 Bil syndicated loan
UPSIDE (%): 47.27
are spread over a long period such that BLOOM is scheduled to pay Php7.5 Bil this year
and Php7.3 Bil next year.
SHARE PRICE MOVEMENT
Jeju Sun to receive subsidy from the Korean government. BLOOM’s casino in Korea,
Jeju Sun, has also been closed since March 21 and similar to Solaire, BLOOM continues to 110
pay its employees in Korea on top of other fixed expenses. The estimated cash burn per
day in Jeju Sun is around Php2.5 Mil. On a brighter note, the government announced it 100

will provide subsidy for the payroll of the employees. According to BLOOM, around 30% of 90
the payroll expenses (which accounts for 60% of cash expenses) will be subsidized by the 80
government.
70

Flexible capex. BLOOM is keeping its capex very flexible for now. Its major uses of capex are 60
Solaire North and the conversion of the ballroom into a new gaming area. The construction
of Solaire North is still in its early stages thus construction can easily be deferred to next
50

year. Even after the ECQ is lifted, the company said it will evaluate market demand to 40

determine how to proceed with its capex plan. For the conversion of the ballroom to
24-Jan-20 24-Feb-20 24-Mar-20 24-Apr-20

gaming area, the company still has an unspent budget of Php1 Bil. This includes fit out BLOOM PSEi

and gaming equipment. Although there is still great uncertainty on when the quarantine
situation will ease, BLOOM deems this project a priority and will push through with the
construction when it is allowed. This can be easily finance by the company’s cash on hand. ABSOLUTE PERFORMANCE
1M 3M YTD
FORECAST SUMMARY BLOOM 23.04 -44.22 -49.05
PSEi 14.47 -28.31 -30.07
Year to December 31 (Php Mil) 2016 2017 2018 2019 2020E 2021E
Revenues 27,590 33,022 38,220 46,337 25,673 39,441
% change y/y 10.2 19.7 15.7 21.2 -44.6 53.6
EBITDA 8,895 12,281 14,753 19,539 6,947 14,049 MARKET DATA
% change y/y 171.8 38.1 20.1 32.4 -64.4 102.2
EBITDA margin 32.2 37.2 38.6 42.2 27.1 35.6 Market Cap 60,378.83Mil
EBIT 4,040 7,928 11,124 15,850 3,257 10,360 Outstanding Shares 10,977.97Mil
% change y/y - 96.2 40.3 42.5 -79.4 218.1 52 Wk Range 4.03 - 12.44
EBIT margin 14.6 24.0 29.1 34.2 12.7 26.3 3Mo Ave Daily T/O 44.16Mil
Core net income 2,819 5,610 6,831 10,275 -1,670 5,691
% change y/y - 99.0 21.8 50.4 -116.3 -440.8
Net profit margin 10.2 17.0 17.9 22.2 -6.5 14.4
EPS (cents) 0.21 0.55 0.65 0.90 (0.16) 0.51
% change y/y - 161.0 18.2 38.5 -117.3 -427.4

RELATIVE VALUE Richard Lañeda, CFA

P/E (X) 28.5 10.9 9.2 6.7 (38.4) 11.7 Senior Research Manager
EV/EBITDA 9.9 7.1 5.9 4.5 12.6 6.2
richard.laneda@colfinancial.com
P/BV (X) 2.7 2.2 1.8 1.5 1.6 1.4
ROE (%) 9.6 20.0 19.6 21.9 (4.0) 12.0
Dividend Yield (%) 0.0 0.0 1.7 1.7 1.7 1.7
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
sothe
urce:
COLBFinancial
LOOM , COL estimates
website as these may be subject to tampering or unauthorized alterations.
 FIELD NOTES I BLOOM: BALANCE SHEET STRONG ENOUGH TO HANDLE THE WORST

FRI 24 APR 2020

Ample liquidity for at most two years

With BLOOM’s flagship casino Solaire Resort and Casino closed since March 15 because
of the government-ordered enhance community quarantine (ECQ), one of the main
concerns is how long BLOOM can stay liquid. BLOOM expressed confidence that they
have enough liquidity to last at most two years as it has Php42 Bil in cash. Conservatively
speaking, the estimated cash burn per day is around Php28 Mil which includes utility,
salaries, maintenance, office expenses, and other fixedcosts. BLOOM also mentioned
that they did not reduce employee headcount during this difficult time. Meanwhile, total
interest and principal payments for its Php73.5 Bil syndicated loan are spread over a long
period such that BLOOM is scheduled to pay Php7.5 Bil this year and Php7.3 Bil next year.

Exhibit 1. Repayment schedule of Php73.5 Bil syndicated loan

Source: BLOOM

Solaire hotel operational but not accepting new guests

With the Solaire casino closed, its hotel is not accepting new guests. However, there
are around 100 guests staying in the hotel. These guests have been staying prior to
the announcement of the ECQ and BLOOM kept two restaurants open to cater to these
guests. Occupancy rate is very low given that the resort has a total of 800 hotel rooms.

COL Financial Group, Inc. 2

 FIELD NOTES I BLOOM: BALANCE SHEET STRONG ENOUGH TO HANDLE THE WORST

FRI 24 APR 2020

Jeju Sun to receive subsidy from the Korean government

BLOOM’s casino in Korea, Jeju Sun, has also been closed since March 21 and similar to
Solaire, BLOOM continues to pay its employees in Korea on top of other fixed expenses.
The estimated cash burn per day in Jeju Sun is around Php2.5 Mil. On a brighter note,
the government announced it will provide subsidy for the payroll of the employees.
According to BLOOM, around 30% of the payroll expenses (which accounts for 60% of
cash expenses) will be subsidized by the government.

Flexible capex

BLOOM is keeping its capex very flexible for now. Its major uses of capex are Solaire North
and the conversion of the ballroom into a new gaming area. The construction of Solaire
North is still in its early stages thus construction can easily be deferred to next year. Even
after the ECQ is lifted, the company said it will evaluate market demand to determine
how to proceed with its capex plan. For the conversion of the ballroom to gaming area,
the company still has an unspent budget of Php1 Bil. This includes fit out and gaming
equipment. Although there is still great uncertainty on when the quarantine situation will
ease, BLOOM deems this project a priority and will push through with the construction
when it is allowed. This can be easily finance by the company’s cash on hand.

COL Financial Group, Inc. 3

 FIELD NOTES I BLOOM: BALANCE SHEET STRONG ENOUGH TO HANDLE THE WORST

FRI 24 APR 2020

Bloomberry Resorts INCOME STATEMENT (PHPMIL)

Corporation (BLOOM) Revenues

2016
27,590
2017
33,022
2018
38,220
2019
46,337
2020E
25,673
2021E
39,441
% Growth 10.2% 19.7% 15.7% 21.2% -44.6% 53.6%
COMPANY BACKGROUND Adjusted EBITDA 8,895 12,281 14,753 19,539 6,947 14,049
Bloomberry Resorts Corporation develops % Growth 171.8% 38.1% 20.1% 32.4% -64.4% 102.2%
Adjusted Operating Profit 4,040 7,928 11,124 15,850 3,257 10,360
tourist facilities, casino entertainment, and
% Growth -355.1% 96.2% 40.3% 42.5% -79.4% 218.1%
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 (1,670) 5,691
which is one of the four license holders in % Growth -170.1% 157.5% 18.4% 38.5% -116.8% -440.8%
Entertainments City. Solaire is currently the EPS 0.21 0.55 0.65 0.90 (0.16) 0.51
% Growth -169.1% 161.0% 18.2% 38.5% -117.3% -427.4%
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 68,870 66,687
REVENUE BREAKDOWN Receivables 2,958 2,283 2,806 5,207 2,885 4,432
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 72,786 125,649 174,113 169,759 172,943
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 42,560 47,090
Hotel, food and beverage Gaming Total Liabilities & Equity
Retail and others
67,515 72,786 125,649 174,113 169,759 172,943
Hotel, food and beverage Gaming Retail and othersBVPS 2.19 2.75 3.32 4.12 3.87 4.28
Gaming Retail and others
CASHFLOW STATEMENT (IN PHPMIL)
2016 2017 2018 2019 2020E 2021E
Pretax Income 3,982 6,295 7,039 10,109 (1,620) 5,731
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 4,141 457
Operating Cash Flow 6,353 13,420 22,527 18,425 11,279 14,697
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 -5,848 -2,183

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 FIELD NOTES I BLOOM: BALANCE SHEET STRONG ENOUGH TO HANDLE THE WORST

FRI 24 APR 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% 27.1% 35.6%
The local gaming sector is still in a growth
OPM (%) 14.6% 24.0% 29.1% 34.2% 12.7% 26.3%
phase and Bloomberry, the operator NPM (%) 8.5% 18.4% 18.8% 21.5% -6.5% 14.4%
of Solaire Resort and Casino, is a main Times Interest Earned (X) 1.8 3.7 2.4 2.8 0.6 2.1
beneficiary of the trend. Solaire Resort and Current Ratio (X) 1.77 2.16 2.13 3.90 3.22 2.93
Casino is one of four integrated resorts in Net D/E Ratio (X) 0.81 0.34 0.95 0.76 0.87 0.76
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% 15.1% 22.8%
completed, Philippines will make a better
ROAE (%) 10.3% 22.3% 21.5% 24.3% -3.8% 12.7%
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

 FIELD NOTES I BLOOM: BALANCE SHEET STRONG ENOUGH TO HANDLE THE WORST

FRI 24 APR 2020

Valuation RELATIVE VALUATION

Methodology
EV/EBITDA EBTIDA growth
2020E 2021E 2020E 2021E
Bloomberry Resorts 12.6 6.2 -65.0% 102.2%
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 15.2 9.7 -45.3% 61.4%
Industry Median 13.8 9.5 -43.2% 63.2%

VALUATION ASSUMPTIONS

DCF valuation
Risk Premium 9.0%
Risk Free Rate 6.0%
Beta 1.2
Cost of Equity 16.8%
Cost of Debt 7.5%
Tax Rate 0.0%
WACC 12.2%
Terminal Growth Rate 0.0%

PV of cash flows 100,186

Value of land 16,200
Enterprise value 116,386
Net debt -27,247
Net asset value 89,138
O/S 11,009
FV Estimate (Php) 8.10

COL Financial Group, Inc. 6

 FIELD NOTES I BLOOM: BALANCE SHEET STRONG ENOUGH TO HANDLE THE WORST

FRI 24 APR 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