The Philippine Gaming and Amusement Corp. (PAGCOR) is under pressure to sell off its casino assets. According to a new report by Maybank Securities, some casino firms may be interested in buying those operations, if the price is right.
To close the deals, PAGCOR would have to come down on the asking price. Maybank analyst Miguel Sevidal said PAGCOR has assessed its properties alongside Philippines market leader Bloomberry Resorts and the biggest names in Macau, including Sands China and Wynn Macau.
Sevidal said few operators want to fork over PHP80 billion (US$1.44 billion) for the assets, but at the right price, buyers could include Newport World Resorts operator Travellers International Hotel Group and some Clark casino operators such as Hann, Royce and Midori.
“Travelers may be a candidate, given its medium- to long-term plans of setting up small casino-hotels in tourism estates, which management communicated during the recent 4Q22 earnings call,” Sevidal said.
“Existing operators in Clark may be interested to bid to expand their regional footprint,” he continued. “On top of the 10 casino sites in Metro Manila, eight of the PAGCOR properties are situated in the Central Luzon region, within vicinity of Clark. The Central Luzon region notably benefits from above-average disposable income growth and infrastructure development.”
In March, PAGCOR Chairman and CEO Alejandro Tengco said he plans to sell off the agency’s casino portfolio before he leaves office. PAGCOR, which regulates gaming in the country, has been criticized for also acting as an operator, a potential conflict of interest. The agency currently operates 43 casinos, reported Inside Asian Gaming.
Again, Sevidal said, PAGCOR could need to come down on the price to unload the casinos. “Considering the slower post-Covid recovery of PAGCOR casinos, below-industry GGR growth observed for PAGCOR casinos, [and] likely high costs for rehabilitation and integration with existing properties for prospective buyers … PAGCOR’s proposed valuation is steep.
“We do not expect a transaction to occur at these valuations, which are in line with Macau casinos. Philippine casinos have historically traded at a 25 percent discount to Macau operators.”
In related news, as reported by GGRAsia, PAGCOR reported net income of approximately PHP1.34 billion (US$24.0 million) for the first quarter of 2023, compared to PHP624.7 million during the same period in 2022.
