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Stock Commentary

Bloomberry Q2 profit up 75%

Merkado Barkada
MB
BLOOM, like PLC, will make buckets of money once it's safe to crowd people back into smokey rooms, ply them with alcohol, and invite them to play games of chance that always favor the house.
Merkado Barkada

Bloomberry [BLOOM 5.60 2.19%] recorded Q2/21 net loss of P1.2 billion, up 75% from Q2/20 net loss of P4.7 billion, and down 50% from Q1/21 net loss of P0.8 billion.

The Razon Family’s resort/casino company easily beat its Lockdown 1.0 performance, but failed to outperform its Q1/21 numbers due to the reimposition of ECQ/MECQ in March/April of this year. BLOOM noted that its casino, Solaire, has not been open to the public since May of this year when the casino was set to “invite-only”.  Solaire was open for 47 days of “dry run” operations this Q2, whereas it was only open for 16 days of limited operations in Q2 last year. BLOOM’s casino in Korea is still closed, and has been since the onset of the COVID lockdowns in 2020.

Taking all of 2021 so far, BLOOM’s 1H performance is up 42% over last year, but it’s still down 142% from its first half net income of 2019.

MB BOTTOM-LINE

Like we discussed with Premium Leisure Corp [PLC 0.41 0.00%] yesterday, the profitability of these casinos is like perfectly inverse to COVID-related movement restrictions.

BLOOM, like PLC, will make buckets of money once it's safe to crowd people back into smokey rooms, ply them with alcohol, and invite them to play games of chance that always favor the house. BLOOM, like PLC, had a better Q2 this year than last (when it was mostly shut down), but a better Q1 than Q2 because of the return to greater movement restrictions in March/April of this year.

Unlike PLC, however, BLOOM is still incurring net losses and has not figured out a way to break even under reduced operations. I’ve not done a deep dive into the financial statements of PLC and BLOOM to determine what allows PLC to float along profitably under reduced operations, or what might cause BLOOM to continue losing boatloads of cash under the same conditions. PLC is operating at 40% of its 1H 2019 profitability, whereas BLOOM is lagging behind at -142% 1H 2019 profitability.

That’s a major difference that is worth exploration. Might be easily explainable. When BLOOM is operating full-out it’s clearly a cash cow, but it appears to struggle when the water rises. Gaming stocks are not something that I spend a lot of time looking at, but I’m interested to learn more, and investigating this difference is something that I will use as a motivation to dig deeper and understand what’s at play here.

 

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BLOOMBERRY RESORTS CORP. PHILIPPINE STOCK EXCHANGE
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