Fitch Ratings upgrades Universal Entertainment
Fitch expects the company to steadily improve cash flow generation as operations at its Manila integrated resort continue to stabilise.
Japan.- Fitch Ratings has upgraded Universal Entertainment Corporation’s long-term Issuer Default Rating (IDR) to B- from CCC+. The rating outlook is stable. The agency has also upgraded its outstanding US dollar senior secured notes to ‘B-‘ from ‘CCC+’ with the recovery rating maintained at ‘RR4’.
Fitch says it expects Universal’s IR revenue to return to about 80 per cent of its pre-pandemic levels this year and a full recovery next. Universal Entertainment is the ultimate parent of the Okada Manila casino resort in the Philippines.
The upgrade also reflects the successful refinancing of debt due in 2021, which demonstrated access to the debt-capital market.
“UE’s Manila IR business has not been operating at its full scale and has not been receiving a significant volume of international travelers due to the pandemic, with domestic customers driving the recent recovery,” Fitch said in the report published today (Friday). “We will revise our forecast once there is a meaningful recovery in customer traffic and growth in revenue and earnings.”
The ratings agency said it currently had a “neutral” view on Okada Manila’s plans to gain a NASDAQ listing through a merger with special acquisitions company 26 Capital Acquisition Corp.
“Fitch is also maintaining a cautious outlook on the amusement-equipment segment due to uncertain end-market demand amid a delay in the cycle of machine replacement at pachinko halls and potential production constraints caused by the global chip shortage. Still, the segment is financially self-sufficient and it has paid for the construction and funding needs of the IR business,” the agency added.
Universal Entertainment Group posted net income of JPY 10.9bn (US$84.3m) for the first quarter of 2021. Net sales reached JPY 27.7bn (USD$214m), up 89 per cent compared to the same period the previous year. Total assets at the end of Q1 amounted to JPY 593.9m (US$4.5m), an increase of JPY 21.6m (US$167.000) from the prior-year period.
