The opening of Okada Manila hasn’t cannibalized the gaming revenues of Manila’s integrated resorts, with GGR rising 20 percent, 28 percent and 13 percent quarter-on-quarter in 17Q2, according to a note from Morgan Stanley on Thursday.
Philippines gaming stocks have not performed well since May, due to concerns about Okada, but Morgan Stanley said it wasn’t concerned about cannibalization, which was not visible in 17Q2.
“Strong tourist arrivals and NAIA Expressway have brought in more Chinese and Filipino mass customers from cities outside of Manila respectively,” said the analysts.
While Okada Manila currently has all its mass tables running, between 20 to 30 percent of them have been affected by day-to-day construction on the floor, noted Morgan Stanley.
Junket operations, which started in 17Q3, will continue to expand over the next few months.
While Manila’s IRs saw gaming revenue rise, operating costs also rose, going up 13 percent quarter-on-quarter in 17Q2.
“This was driven mainly by two factors, 1) higher advertising expenses, and 2) higher rebates/one-off bonus and incentives to junkets (happens in 2Q every year). Thus, strong GGR growth may not fully translate into similar EBITDA growth or margin expansion,” said the analysts.
The brokerage says it expects EBITDA of existing operators to grow sequentially in 17H2 and 2018 due to slow ramp of Okada.
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