The ratings agency warned that intense competition in the Philippine casino market and rising operating costs continue to weigh on Okada Manila’s performance.
The Philippines.- S&P Global has revised its outlook for Universal Entertainment Corporation from stable to negative. Although they affirmed Universal Entertainment’s long-term issuer credit rating at B-, analysts warned that the company’s casino resort business in the Philippines continues to underperform due to fierce market competition and inflationary pressure, which it believes will continue to pressure earnings throughout the fiscal year.
Okada Manila reported a difficult first quarter, with adjusted EBITDA falling 55.7 per cent year-on-year to JPY2.04bn (US$12.9m). Net sales declined 16 per cent to JPY15.4bn (US$97.2m), while operating profit dropped more than 92 per cent. Casino gross gaming revenue fell 17.2 per cent.
S&P has lowered its forecast for the annual EBITDA contribution from the Philippine resort business to JPY10bn (US$62.9m). It also highlighted the company’s debt burden. Analysts estimate annual interest expenses of JPY15bn (US$94.3m), while capital renewal investments at Okada Manila could add another JPY9bn (US$56.6m) per year in costs. As a result, S&P expects free operating cash flow to remain negative and cash reserves to continue declining.
Despite the downgrade in outlook, S&P said the company’s short-term liquidity remains manageable, noting that less than JPY5bn of debt is due within the next 12 months. However, the agency warned that a further downgrade could follow if profitability and cash flow fail to improve.
The ratings agency warned that intense competition in the Philippine casino market and rising operating costs continue to weigh on Okada Manila’s performance. The Philippines.- S&P Global has revised its outlook for Universal Entertainment Corporation from stable to negative. Although they affirmed Universal Entertainment’s long-term issuer credit rating at B-, analysts warned that the company’s…
