Morgan Stanley analysts question PAGCOR casinos sale price
Analysts have cast doubt on the asking price for PAGCOR’s casinos.
The Philippines.- Analysts from Morgan Stanley have questioned the asking price for the Philippine Amusement and Gaming Corp’s (PAGCOR) state-owned casinos. They believe the mooted price of PHP80bn (US$1.47bn) for its 44 Casino Filipino sites and satellite casinos is too high.
They note that more details are needed on the expansion plans for the casinos, including for igaming and electronic payment, which it says will be seen as positive but need flashing out.
Alejandro H. Tengco, chairman and chief executive officer of PAGCOR, said the regulator-cum-operator was “seriously considering the privatisation of all PAGCOR-operated casinos” in order to split its regulatory and operating functions.
A PHP80bn (US$1.47bn) sale price would imply an 11-times enterprise value to earnings before interest, taxation, depreciation, and amortisation ratio, assuming a 20 per cent margin on PAGCOR’s 2019 gross gaming revenue of PHP37bn and that assets are debt-free.
Last year, PAGCOR generated PHP15.9bn in gross gaming revenue from its 44 state-owned Casino Filipino sites and PHP55.05bn in income from gaming operations, up 68.7 per cent yearly. Tengco has suggested bundling the casinos for a sale to unlock greater value for bidders. He said he hoped to implement the privatisation during his term, which runs until 2028.
Tengco said the move would help improve PAGCOR’s efficiency as a regulator. Nonetheless, analysts suggest the sale may be a challenge as PAGCOR-owned casinos face stiff competition from privately-owned casinos in terms of amenities and customer services.
See also: PAGCOR’s Alejandro Tengco confirmed to headline SiGMA Asia summit
Philippine senator urges government not to lose time in banning POGOs
Philippine senator Sherwin Gatchalian has urged the government to act quickly on his draft report to the Senate Committee on Ways and Means calling for the ban of POGOs. Gatchalian, who chairs the committee, said POGOs were creating an image of lawlessness in the country, turning off tourists and driving away investors.
His report published last week recommended the shutdown of POGOs outfits within three months. He said he had decided to release the draft report early because kidnapping cases were still occurring. He disputed claims from the Philippine National Police that kidnappings had stopped due to increased patrols.
