Plans by the Philippine Gaming and Amusement Corp. (PAGCOR) to sell off its branded casinos and satellites has received a lukewarm response from analysts at Morgan Stanley, mostly because of the price.
According to GGRAsia, Alejandro Tengco, PAGCOR’s chairman and CEO, said the body hopes to bring in PHP80 billion (US$1.47 billion) from the sale of its casino assets. The Morgan Stanley team said the asking price is “too high and buying interest could be low.”
Some lawmakers have criticized the agency for maintaining a dual role as both regulator and operator, which they contend is an inherent conflict of interest. PAGCOR runs 42 casinos, 10 under the Casino Filipino brand in addition to 32 satellites.
According to Inside Asian Gaming, gross gaming revenues (GGR) from PAGCOR-operated casinos reached PHP4.83 billion (US$88 million) in the fourth quarter of 2022, up from PHP4.63 billion (US$85 million) in the third quarter, but well short of the PHP9.17 billion (US$169 million) generated in the fourth quarter of 2019.
Praveen Choudhary, Dan Chee, Jeffrey Mak and Gareth Leung of Morgan Stanley said the potential sell-off price “would imply 11 times” enterprise value to EBITDA, “assuming a 20 percent margin on PAGCOR’s 2019 GGR of PHP37 billion, and that the assets are free of debt.”
The casino sector is important to the local economy, employing an estimated 27,000 workers in 2020, according to government data.
