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Morgan Stanley cites opportunities for investment in the Philippines; analysts positive towards the country’s gaming industry

August 23, 2023 Philippines Industry Updates

The international investment and banking company also puts Bloomberry Resorts as the country’s leader of the gaming industry

Original story by Viviana Chan for Asia Gaming Brief

In the latest market report, Morgan Stanley (MS) has identified investment opportunities in the Philippines gaming industry.

In this comprehensive report, MS states that “the Philippines is among the most overlooked by Emerging Market investors, who have been underweight in the market for the last five years.”

“Despite having an economy that rivals the sizes of Thailand, Malaysia, and Singapore, the Philippines’ stock market is only half as large as those of its ASEAN counterparts.”

Analysts Gareth Leung and Praveen Choudhary affirm a positive stance on the Philippines gaming industry, stating that the country was one of the fastest-growing gaming markets in Asia before COVID-19, with Gross Gaming Revenue (GGR) in Entertainment City rising at a 23 percent CAGR from 2014 to 2019.

In 2019, the Philippine GGR reached $4.2 billion, making it the third-largest market in Asia, close to Singapore’s $4.5 billion. Under these circumstances, MS believes that the “fast growth of the market will continue post-COVID,” driven by a growing local economy and inbound tourism.

In the second quarter of 2023, Philippine GGR has already reached 110 percent of the 2019 levels, while inbound traffic is only at 70 percent of the 2019 levels, and Chinese gamblers remain minimal.

MS prefers Bloomberry Resorts, the leading player in the Philippines gaming market, noting that the stock has risen by 41 percent year-to-date, compared to a 2 percent fall in the PSE index. However, the brokerage believes that there is more upside potential, as the market cap is still 20% below the peak of 2019. Bloomberry is set to open a major casino in Quezon City in 2024, roughly half the scale of the existing casino in Entertainment City.

MS projects EBITDA for 2024 and 2025 at 125 percent and 170 percent of the 2019 levels. “Historically, Macau gaming stocks have rallied 30 percent ahead of a major casino opening. We believe that positive consensus revisions will also provide support for the stock.”

Learn more about Bloomberry’s financial performance and the factors that drove it in the full article by Viviana Chan at Asia Gaming Brief here:

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