March 15, 2015 – A Domestic Differentiation. Recurring is Rewarding .


The portion of a company’s revenue that is highly likely to continue in the future. This is revenue that is predictable, stable and can be counted on in the future with a high degree of certainty.


Landlords (commercial buildings such as malls and office space) are usually priced at a premium because even if the market climate for interest rates are highly susceptible to changes in spending; monthly rental from business is less fixated on such and is expected to be paid in advance (3 months deposit, some as long as one year deposit for discounted terms)  and hedged with inflation beating returns (as monthly rents have an inflationary adjusted incremental rate depending on terms stated by landlord and lessee.)

There has been wide receptance for REIT or Real Estate Investment Trusts because of this “high certainty” of cashflows.  The best valuation model to use for any type of entity that has a recurring cash flow will be DCF (or discounted cash flow methods.)


Tomorrow, March 16, 2015 is the last day to purchase #PLC or Premium Leisure Corp and still be entitled to the 2.2 centavos per share dividend.

cash div 1

As of March 13, 2015’s closing price of P1.59; not only are we sitting in a company that will pay us 2.2 centavos in a day’s time, we are also sitting in the support zone which was retested 4 multiple times with strong buying on major funds and strong hands.

2.2 cents/1.59 = 1.3% dividend yield despite City of Dreams Manila just opening doors in 4Q2014.  Note that we should then estimate 2015-2025 earnings to come out with a dividend discounting model to value what #PLC is worth as well as the estimated dividend income (80% Payout ratio) to estimate the yield we shall receive every year.



Note that the company has a dividend policy ratio of at least 80% of the company’s retained earnings to be paid every year.   It is the only Philippine gaming company which has this dividend payout policy.  It is the One and Only Dividend Yield Play in Philippine Gaming.

Premium Leisure Corp. has chalked up a consolidated net profit of P1.34 billion in 2014—its first year of reorganization as a gaming investment firm—enabling the company to start paying out dividends to shareholders.

PLC, formerly Sinophil Corp., obtained board approval to earmark P700 million or 94.63 percent of unrestricted retained earnings in 2014 as cash dividend to common shareholders. This is equivalent to a cash dividend of about P0.022 a share payable on April 17 this year to shareholders on record as of March 20.

The company announced earlier a dividend policy of paying out at least 80 percent of the previous year’s unrestricted retained earnings.

Last year, PLC realized gains from the sale of some property assets into parent Belle, the reversal of provision for impairment in Legend International Resorts Hk Ltd. and the higher market valuation of gaming assets transferred into its books when it was converted by Belle into its gaming arm.

This allowed PLC to declare dividends without waiting for the first full year of operations of COD Manila.

PLC is entitled to half of the gaming revenues or cash flow based on earnings before interest, taxes, depreciation and amortization of COD Manila. Belle is in turn seen benefiting from PLC’s dividends given that it owns 79 percent of the gaming investment firm.

As a gaming investment firm, PLC is being pitched to investors as a dividend play as it offers direct participation in the earnings of a gaming company.
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Remember this: A stable dividend payout ratio indicates a solid dividend policy by the company’s board of directors.

market cap


What is Premium Leisure Corporation’s main business?  It is first and foremost a co-licensee in City of Dreams Manila.  It owns 100% of PLAI which in turn collects Gaming Ebitda from City of Dreams Manila as well as 34.5% stake in LOTO or Pacific Online Systems Corporation which is essentially Philippines’ only lottery and sweepstakes play.  It is a gaming-focused investment.


1.) 0 debt, no capex. 80% dividend payout policy = Only Dividend Player Among Gaming Companies

2.) Strong free cash flows stream.  At 1.59; with 2015 estimated net income of P3 Bil on gross gaming revenues of P4.8 Bil will yield 5% (8 cents/1.59) assuming the 80% policy rule.  This makes it at the top ten of the dividend paying companies in the Philippines at par with telco operators #TEL and #GLO

3.) High Upside , Protected Downside

Tremendous growth of the industry = higher FCF in the future; and higher dividend payout stream. Downside is protected as well.   After CoD Manila opens, MCP is obligated to make monthly payments to Premium Leisure (effectively equivalent to ~50% of gaming EBITDA).

With its strong free cash flows, even ascribing WACC rates of 11.5% – 12%; the estimated target price per share

assuming revenues of P4-5 Bil in Year 1  or a net income band of P3-4 Bil in Year 1 with industry growth rates of 20-30% until 2018 will still result to a target price band between P 2.20- P 2.60

4.) While Chinese crackdown have blinded investor appetite to assume gaming operations in the Philippines to suffer; earnings data and revenue numbers of the industry fail to show any decline and is alternatively growing.

what is plc business

lotto scratch it




In a disclosure to the Philippine Stock Exchange, Premium Leisure said it set the price of the offer shares at P1.65 apiece, or a 10.33 percent discount from its last closing price of P1.84 per share on September 18 when the company went on a voluntary trading suspension at the start of the road show.

Premium Leisure shares resumed trading today, opening 7 percent lower at P1.71 per share.

Belle, its subsidiaries Foundation Capital Resources Inc and Parallax Resources Inc, and affiliate APC Group Inc entered into a placing agreement with CLSA Limited, Credit Suisse (Singapore) Limited and Macquarie Capital (Singapore) Pte Limited covering the sale of 3.26 billion shares in Premium Leisure.

Belle will unload 3.003 billion shares in PLC; Foundation Capital, 156.53 million shares; Parallax Resources, 13.824 million shares; and APC Group, 90 million shares.

Gross proceeds from the equity offering will reach $121 million, or P5.39 billion, before exercising the overallotment option. Belle will sell up to 489.56 million additional shares to cover the greenshoe option.

The offer shares will be crossed through the PSE today upon execution of a block sale. Settlement for the shares will be on October 2.

CLSA, Credit Suisse, and Macquarie were tapped as joint global bookrunners with CLSA acting as the sole global coordinator.

The Belle group trimmed its shares in Premium Leisure to boost the latter’s liquidity amid increased demand since it became the gaming vehicle of the Sy family.

CLSA Limited is buying 284.652 million more common shares of Premium Leisure Corp. (PLC) from Sy-led Belle Corp., exercising the greenshoe option to stabilize the share price of Premium Leisure.
In a disclosure to the Philippine Stock Exchange, Belle said it was notified by CLSA on exercising its right to by up to 489.556 million common shares of Premium Leisure under the over-allotment option.
“Based on said notice, CLSA will be purchasing 284.652 million Common Shares of PLC from the corporation at P1.65 per share payment for which shall take place no later than 11:00 a.m. (Philippine time) on 29 October 2014,” the disclosure read.
CLSA has already bought 204.904 common shares of Premium Leisure from September 29 to October 24 at an average price of P1.64 per share for stabilization purposes.
Not only are current investors able to get a discount below BIG INSTITUTIONAL APPETITE for Dividend Yielding Plays; you also get a wide 8 centavos discount from the IPO and an even higher upside from a fundamental valuation perspective.
P1.59 receives 2.2 cents automatically and is 6 cents discounted from IPO price of P1.65; below the greenshoe option taken by Global coordinators.  What a great steal 😀
If we assume #PLC can rise to P2.30 and have a cost of P1.59 ; not only are we able to get an upside of 44% for the year; we also will get a guaranteed 2.2 centavo dividend and a possible 8 cent dividend growing 20-30% year on year.  This is not only a great dividend stock but is also a great dividend grower such that its target price will naturally rise.
BUY #PLC 1.59 or lower.  Be Aggressive when the Fundamentals and the Technicals are all BUY Signals. 
Industry Outlook:
Philippine Gaming: Strong Long-Term Outlook- Philippine Gaming Lures Bettors Away from Macau
News Worthy Snippets, Highlights (author discretion)
1.) January 8, 2015
The Philippines is expected to be the fastest growing gaming jurisdiction in Asia, with gross gambling revenue likely to surge 32 percent in 2015 on the back of new openings, though the market may not be as deep as had been hoped, according to a report from Citi.
The growth will take the total size of the market to $2.7 billion in 2015, from $2.05 billion in 2014, a gain of 9 percent.
“We believe the exceptional growth in the Philippines gaming market seen in 2014 was a perfect example of “build it and they will come,” the report said.
City of Dreams Manila will become the market share leader and capture 23 percent of total market share by 2018, followed by Solaire at 20 percent and Resorts World Manila at 16 percent.
2.) Feb 6, 2015 
 – lure a slice of the revenues of Asia’s gambling market away from Macau and Singapore
– Melco Crown Entertainment in conjunction with Belle Corp, a subsidiary of major conglomerate SM Group, is banking on its 380 gaming tables, 1,700 slot machines, and 1,700 electronic table games to bring in the high rollers and boost its owners’ stock prices.
– dovetailing with the government’s plan to significantly boost the tourism sector.
– “Entertainment City”, a major strip of land right along Manila Bay earmarked for development as a fully-fledged gaming and entertainment zone.
– Melco Crown CEO Lawrence Ho expects CoD Manila’s revenue breakdown to differ a little. “Unlike Macau, where the gaming to non-gaming split is roughly 90/10, I expect non-gaming revenue in Manila to account for anything up to 25-30 per cent of total spend, given the huge domestic demand for entertainment and leisure,” he told Asean Confidential.
– Moreover, he expects the gaming component itself to be more evenly split 50/50 between VIP and mass-market customers.
– CoD thus has the potential to cannibalise a significant chunk of existing market from the likes of Bloomberry, as well as Pagcor, which simultaneously acts as the national gaming regulator and operator or several casinos nationwide. The resort’s potential to attract a big domestic following is also boosted by CoD’s tie-up with SM Group, the Philippines’ largest operator of shopping malls, which has helped drive the complex’s brand development.
– At a macro level, the Philippines’ chances of nibbling into Macau and Singapore’s market share has been further boosted by recent slowdowns in both. Macau, for example, recently recorded its eight consecutive month of negative growth in gaming revenue, dropping 17.4 per cent year on year in December to MOP23.75bn ($2.97bn).  Macau’s full-year revenue fell 2.6 per cent year on year, the first annual decline since records began, largely in line with widespread anti-corruption crackdowns in mainland China and growing entry visa restrictions. This could push some China-based high-rollers to consider Manila as an alternative, particularly given its proximity and cost competitiveness relative to Singapore
– Philippines has around 300,000 South Koreans working or studying in the country, and constitute a major target group.
3.) Feb 19, 2015 –

Supreme Court upholds Pagcor’s tax exemption

The Supreme Court has ordered the Bureau of Internal Revenue (BIR) to stop implementing its Revenue Memorandum Circular (RMC) 33-2013 subjecting income of Philippine Amusement and Gaming Corporation (Pagcor) from its operations and licensing of gambling casinos, gaming clubs and other similar recreation or amusement places, gaming pools and other related operations to corporate tax.Read more:
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4.) Pagcor Delivers P3.25 Bil income for FY14  (Growing Despite Increased number of licensees such as CoDM, Solaire and RWM) – Industry is Increasing.  Build it and They will Come.
FY Net Income
2012  P2.8B
2013  P3.09 B
2014  P3.25 b
pagcor 2014pagcor 2013
casinos by pagcor
Investing in Casinos Also Contributes to the Philippine Economy.  Did you know the Casinos pay one of the largest income contribution to the Philippines?
Nationbuilding through Casinos.  Yes.
nation building through casinos
Gaming Gives.
gaming gives
silid aralan project
Confiscated Illegal Logs Turned into Chairs for Public Schools
pinoy bayanihan
old slot machines to desks
5.) March 5, 2015 – Asian casinos steal Chinese bettors away from Macau

Macau casino revenue fell last year for the first time and may decline another 8 percent this year, according to analysts surveyed by Bloomberg. By contrast, South Korea and the Philippines will grow 16 percent and 33 percent, respectively, this year, gaining from the spillover of Chinese gamblers, Deutsche Bank analyst Karen Tang wrote in a note.

Major Structural Trends
1.) A Fundamental shift from West to East of the gaming industry is seen to boost Philippine economy
2.) Strongly Reflective of Highly Discretionary Consumption Spending of ASEAN neighbors and local affluence; Higher Disposable Income of Filipinos = Strong Tailwind for Casinos 
3.) Gaming Transitions from Gambling to Entertainment – Attract Leisure Spenders
4.) Build it and they will come: Seen as one of the drivers or “Tourist” attractions of the Philippines; Increased overseas reach as Philippines remains one of the lowest cost holiday destinations for ASEAN neighbors. 
5.) Diversified Clientele; Less Dependent to Macau Crackdown 
Korean, American, Australian, Japanese  and Canadian visitors being lead contributors outranking Chinese.

Visitors from Korea have the highest contribution with Php 61.02 billion, accounting for 33% of all inbound receipts. United States of America followed with Php 41.43 billion constituting 22% share, Australia (Php 13.94 billion) and Japan (Php 10.68 billion). Canada with Php 8.48 Billion ranked5th outranking China which recorded the fifth biggest revenue in 2013.   

strong asian wealth

I believe the Philippines’ gaming market has greater long-term growth potential than other ASEAN countries as it is largely sustained by a robust domestic economy, as well as a diverse VIP profile and growing affluence of the local population. Longer term, I expect the Philippine gaming industry gross gaming revenues (GGR)  to grow to $6-8 Bil by 2018-2020 or a CAGR beyond 30% due to new casinos and expansion of existing facilities in Pagcor’s Entertainment City.
1.) Less Dependent on Chinese Players in Macau = More Resilient Philippine Gaming Revenue Growth and Earnings Growth
Philippine Gross Gaming Revenues grew across the board for all players versus Macau gaming industry’s decline for 2014- We see Philippines a huge contrast versus Macau.  All Casinos in the Philippines are profitable.  Solaire, Resorts World Manila , Pagcor. 
a.) #BLOOM turns profitable within one year’s worth of operations

Bloomberry Resorts Corporation, owner and operator of the Solaire Resort & Casino, reported “a massive  turnaround in profitability” for the nine months of the year.

In a disclosure to the Philippine Stock Exchange, the firm said it generated earnings of P3.3 billion in the first nine months of 2014, nearly five times larger than the P868 million loss reported in the same period last year.

Bloomberry grew its total gross revenues by 127 percent to P22.44 billion from the P9.89 billion posted in the same period last year.


b.) #RWM GGR grew 4.7% YOY (9M14 vs 9M13) , EBITDA jumps 41.6% higher in 3Q14 vs 3Q13 at P2.8 Bil averaging 15% higher for 9M14 at P7.48 Bil. Net income for 9M14 12% higher yoy at P4 Bil.  

Travellers’ Net Profit at P4.0 billion, 12% improvement over same period in 2013

For the three months ended September 30, 2014, TIHGI posted total gross revenues of P8.0 billion, up 4.7% over the same period in 2013 and 9.9% over second quarter of 2014. Gaming revenues contributed P7.2 billion of gross revenues, with hotel, F&B, and other revenues at P772.3 million.  The Company’s gross gaming revenues for the three months ended September 30, 2014 registered a 6.2% improvement versus the same period last year and a 13.2% improvement compared to the three months ended June 30, 2014 with the improvement in win rate which is seen to continue to the next quarter.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three months ended September 30, 2014 reached P2.8 billion or 41.6% higher compared to the P2.0 billion reported in the same period last year. EBITDA for the three quarters ended September 30, 2014 is at P7,486.5 million or 15.1% higher compared to the P6,502.4 million reported in the same period last year.

Travellers remains on net cash position at P4.8 billion as of September 30, 2014.

 2.) Macau may be contracting but Philippines is growing.  

A bigger domestic market is the Philippines’ key edge against other more established gaming destinations in Asia, states a report by Credit Suisse on the Philippine gaming industry.

In its ‘The Philippine Gaming Sector’ report, the Zurich-headquartered international financial services group said the Philippines is viewed as having a potentially large domestic market to complement the VIP market coming in from abroad. The VIP market is traditionally the main cash cow of casino hubs.

The Philippines’ large domestic market is expected to sustain the gaming industry, more so than its casino hub neighbors Macau and Singapore.

“The Philippine population of 97 million is almost 3 times that of Singapore, Malaysia and Macau combined, presenting sizeable onshore potential for the higher-margin mass segment. Meanwhile, limited hotel capacity and the absence of new casinos elsewhere in the region until 2015 could result in a spill-over of foreign VIPs into Philippines,” the report stated.

The Philippines also has the fastest growing working age population in Asia, aside from Japan, and is forecast to grow about 2% annually over the next 10 years.

An improving economy, accelerating wage growth, higher spending power and consumer confidence, which is at near-record highs, all point to favorable demand prospects, the report states.

May 2, 2013

50% of Gross Gaming Revenues are coming from Mass Market 
Geographical profile of VIP customers: 
30% of VIP players are from Korea
30% from ASEAN
20% from China/ HK
20% Locals
Mass Gaming Revenues
More than 80% Locals
2.)  Strong Potential to Lure clients (junket operators) away from Macau and Singapore – Significantly low gaming taxes provides casino operators like CoDM, Solaire and RWM to increase junket commission rates.
3.) Strong Infrastructure Improvements –  P15.5 Bil NAIA Expressway would improve access to Entertainment City with a shorter travelling time.   Construction begun on 2 January 2014 and is expected to be operational by April 2015.[1][2]

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