PAGCOR casinos sale won’t threaten private sector, analysts say
A report suggests the Philippine government may struggle to find buyers for PAGCOR’s casinos as they are outdated and costly to upgrade.
The Philippines.- The Philippine government’s planned sale of its state-owned casinos is unlikely to pose a competitive threat to the private sector, according to a report from Maybank Securities Inc. Analyst Miguel Sevidal has suggested that prospective buyers are likely to face high costs for upgrading the venues and integrating new technology, which may make them unattractive buys.
The analyst noted that only ten of PAGCOR’s 44 Casino Filipino venues were located within proximity to Entertainment City, home to private sector operators such as Solaire Resort and Casino, Okada Manila, City of Dreams Manila, and Newport World Resorts.
Sevidal suggested that interest would be low unless valuations became more attractive. He also noted that Casino Filipino outlets cater primarily to the local mass market and are likely to see a limited boost from the recovery of foreign tourism in the Philippines.
Maybank added that any sale of PAGCOR operations could increase the local mass market exposure of existing private-sector operators and “add 10 per cent to Entertainment City’s gross gaming revenue.” In the fourth quarter of 2022, Entertainment City properties generated just under PHP44.06bn, representing around 78.7 per cent of all industry gross gaming revenue.
In March, 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. He estimated that the Philippines could raise around PHP80bn (US$1.47bn) from the sale of the casinos.
See also: Morgan Stanley analysts question PAGCOR casinos sale price
PAGCOR reports net income of US$317.97m for Q1
PAGCOR has reported net income of PHP1.87bn (US$303.19m) for Q1, up 42.6 per cent year-on-year from PHP624.7m. Revenue from gaming operations was up 49 per cent year-on-year from PHP11.29bn to PHP16.87bn (US$303.19m).
The figure was up 13.61 per cent when compared to the previous quarter. The regulator recorded profits of PHP1.33bn (US$24m), up 114 per cent from the previous year and 423.39 per cent above its target.
In March, PAGCOR announced a target of PHP244.84bn (US$4.5bn) in gross gaming revenue (GGR) for 2023 as the “local gaming industry continues to gain momentum”. The target is 33.1 per cent higher than last year’s target and 14.2 per cent higher than the 2022 GGR.
