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Stock Commentary

Premium Leisure Q2 profit up 199%, but lockdown 2.0 a threat

Merkado Barkada
MB
We’d expect to see PLC’s revenues and profits to fall in Q3 because of Lockdown 2.
Merkado Barkada

Premium Leisure Corp [PLC 0.40 1.23%] posted a Q2/21 profit of P281 million, up 199% from Q2/20 net loss of P284 million, and down 9% from Q1/21 profit of P310 million. PLC is the casino/resort subsidiary of Belle Corporation [BEL 1.37 0.72%]; it owns and operates City of Dreams Manila, and owns a majority stake in Pacific Online Systems Corporation, which develops lottery software and terminals for its main client, the Philippine Charity Sweepstakes Office. PLC credits the year-on-year improvements in Q2 and 1H profits to “more vigorous economic activities in 2021” as compared to the COVID-cancelled Q2 of 2020.

Both the casino and the lottery businesses benefited from the reduced movement restrictions, though the casino side (+225% revenues) benefited more than the lottery software/terminal side (+14% revenues). According to PLC, City of Dreams Manila had been closed from March 29 to April 30 as part of the heightened restrictions earlier this year, and that the casino had only resumed regular gaming operations on May 1. Even then, the casino was limited to just 50% capacity, which was eventually reduced to 40% last week.

MB BOTTOM-LINE

Metro Manila’s return to ECQ will clobber gaming revenues for as long as the movement restrictions last. As we saw with Bloomberry [BLOOM 5.68 3.73%] and Leisure & Resorts World Corp [LR 1.48 2.63%], the revenues and profits predictably increase as restrictions are lifted, and predictably plummet as restrictions are reimposed, so we’d expect to see PLC’s revenues and profits to fall in Q3 because of Lockdown 2.

How far PLC’s numbers will fall depends entirely on how long the hard lockdown lasts, how successful the lockdown is at preventing outbreak of the Delta variant, and the nature and duration of whatever movement restrictions will still be in place once the hard lockdown ends. There really isn’t any doubt about the underlying business model, as gambling (or the need/demand to gamble) is one of those things that is largely unaffected by pandemics (or just about anything else); the casino operators will just try to find protective harbor and weather the storm.

 

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BELLE CORPORATION PHILIPPINE STOCK EXCHANGE PREMIUM LEISURE CORP.
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