Morgan Stanley: Solaire North opening likely delayed until 2Q24

In a note previewing Bloomberry’s 2Q23 results – expected to be released in early August – Morgan Stanley analysts Gareth Leung and Praveen Choudhary said the opening of Solaire North next year would provide significant earnings power but added “we now expect it to open in 2Q24 (previously 1Q24).” They did not provide any reasons for the revised timeline.

Their prediction for such a delay has seen the investment bank lower its 2024 revenue estimates for Bloomberry by 8%, with Solaire North revenues revised down from Php19.2 billion (US$352 million) to Php9.5 billion (US$174 million) and EBITDA from Php3.8 billion (US$69.7 million) to Php1.7 billion (US$31.2 million).

However, the analysts have revised upwards their 2023 estimates “meaningfully” and “to reflect better-than-expected Entertainment City recovery”, with net revenue estimates up 9% and EBITDA by 18%.

They also predict Solaire has gained GGR market share against its main Entertainment City market competitor, Okada Manila, in the June 2023 quarter. Leung and Choudhary are estimating Bloomberry’s group-wide EBITDA in Q2 to reach Php5.2 billion (US$95.4 million), up 10% on 1Q23 and 23% higher than 2Q19, with Solaire market share tipped to have grown by 1.5 percentage points to 37.3%.

This compares to Okada Manila with 26.3% and City of Dreams Manila with 20.3% (leaving Newport World Resorts with 16.1%).

Bloomberry itself has not mentioned any further delays to the opening timetable for Solaire Resort North, currently scheduled to open in the first quarter of 2023. The company this month launched a Career Caravan to help it recruit more than 4,200 staff for its new Quezon City integrated resort.

Morgan Stanley noted that, when Solaire Resort Entertainment City opened in 2013, it took just two quarters to breakeven on EBITDA.

by Ben Blaschke