Bloomberry Resorts Corporation WED 10 MAR 2021

Downgraded to HOLD as recovery stalls

4Q20 net loss reach Php2.4 Bil, FY20 loss widens to Php8.3 Bil. BLOOM reported a net

HOLD
loss of Php2.4 BIl in 4Q20 as the company continues to operate under limited capacity
across its gaming, hotel, F&B, and retail businesses. Their gaming operations only cater
to long-stay hotel guests and select invitees as government restrictions remain in place.
Meanwhile, Jeju Sun in South Korea is still closed since March. Consolidated net revenues
for the quarter were down 60.1% y/y but saw a 35.5% improvement q/q. For the full-year
2020, BLOOM’s net revenues were down 61.6% y/y, leading to a net loss of Php8.3 Bil. TICKER: BLOOM
While revenues were in line with our estimate, BLOOM’s higher-than-expected provisions FAIR VALUE: 8.60
for doubtful accounts and impairment charge of Php947.1 Mil (for BLOOM’s goodwill and
casino license in Korea) led to a higher-than-expected net loss for 2020. CURRENT PRICE: 7.80
UPSIDE (%): 10.26
2021 unlike to see high provisions for doubtful accounts. Last year, BLOOM’s provision
for doubtful accounts almost tripled from Php259.6 Mil in 2019 to Php708.9 Mil in 2020.
According to management, there were a few overseas clients who had difficulty moving
funds during the pandemic, as a result, management conservatively provided for these
accounts. This year, given the low volume in VIP gaming, the credit extended to players is
also significantly less thus they do not expect a repeat of 2020 in terms of the high level of
provisions.
Recovery to lag as restrictions remain in place, estimates reduced. Despite the quarter-
on-quarter improvement, the recovery of BLOOM is expected to fall behind expectations
as restrictions remain in place. We reduced our 2021 net revenue forecast by 37.9% to
Php21.71 Bil and now expect BLOOM to post a net loss of Php4.30 Bil from a net profit
of Php2.86 Bil previously. We also reduced our FY22 revenue and net income forecast by
17.3% and 87.1% respectively.
Reducing FV to Php8.60; Downgrade to HOLD. After factoring in our lower revenue and
net income forecasts for 2021 and 2022, we reduced our fair value estimate to Php8.60
from Php9.20. We also downgraded our recommendation to HOLD from BUY as the
implied upside to our new fair value estimate is limited to just 10.3%. Further upside to our
fair value estimate would come from a successful vaccine rollout which would then result
to the relaxation of quarantine and travel restrictions and higher operating capacity for
integrated resorts.

FORECAST SUMMARY

Year to December 31 (Php Mil) 2017 2018 2019 2020 2021E 2022E
Revenues 33,022 38,220 46,337 17,789 21,711 31,621
% change y/y 19.7 15.7 21.2 -61.6 22.1 45.6
EBITDA 12,281 14,753 19,539 1,430 4,398 9,273
% change y/y 38.1 20.1 32.4 -92.7 207.6 110.8
EBITDA margin 37.2 38.6 42.2 8.0 20.3 29.3
EBIT 7,928 11,124 15,850 -1,918 998 5,873
% change y/y 96.2 40.3 42.5 -112.1 -152.0 488.3
EBIT margin 24.0 29.1 34.2 -10.8 4.6 18.6
Core net income 5,610 6,831 10,275 -8,222 -4,302 573
% change y/y 99.0 21.8 50.4 -180.0 -47.7 -113.3
Net profit margin 17.0 17.9 22.2 -46.2 -19.8 1.8
EPS (cents) 0.55 0.65 0.90 (0.76) (0.40) 0.05
% change y/y 161.0 18.2 38.5 -184.1 -47.7 -111.8

RELATIVE VALUE
P/E (X) 14.2 12.0 8.7 (10.3) (19.7) 167.5
EV/EBITDA 10.5 8.7 6.6 89.8 29.2 13.8
P/BV (X) 2.8 2.4 1.9 2.3 2.6 2.7 Richard Lañeda, CFA
ROE (%) 20.0 19.6 21.9 (16.1) (13.3) 1.6 Senior Research Manager
Dividend Yield (%) 0.0 1.3 1.3 1.3 1.3 1.3 richard.laneda@colfinancial.com
so urce: B LOOM , COL estimates

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
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 EARNINGS ANALYSIS I BLOOM: DOWNGRADED TO HOLD AS RECOVERY STALLS

WED 10 MAR 2021

4Q20 net loss reach Php2.4 Bil, FY20 loss widens to

Php8.3 Bil

BLOOM reported a net loss of Php2.4 BIl in 4Q20 as the company continues to operate
under limited capacity across its gaming, hotel, F&B, and retail businesses. Their gaming
operations only cater to long-stay hotel guests and select invitees as government
restrictions remain in place. Meanwhile, Jeju Sun in South Korea is still closed since
March. Consolidated net revenues for the quarter were down 60.1% y/y but saw a 35.5%
improvement q/q. For the full-year 2020, BLOOM’s net revenues were down 61.6%
y/y, leading to a net loss of Php8.3 Bil. While revenues were in line with our estimate,
BLOOM’s higher-than-expected provisions for doubtful accounts and impairment charge
of Php947.1 Mil (for BLOOM’s goodwill and casino license in Korea) led to a higher-than-
expected net loss for 2020.

Exhibit 1. Results Summary

% of estimates
4Q19 4Q20 change FY19 FY20 change
in Php Mil COL Consensus
Total GGR 14,528 5,312 -63.4% 60,374 22,705 -62.4% 98.7%
Net revenues 10,874 4,330 -60.2% 46,337 17,789 -61.6% 101.0% 90.6%
EBITDA 4,013 130 -96.8% 19,830 1,430 -92.8% 50.7% 29.8%
Reported net income 1,363 -2,413 -277.0% 9,955 -8,313 -183.5% 136.6% 126.0%
Source: BLOOM, COL estimates, Bloomberg

Exhibit 2. Quarter-on-quarter comparison

in Php Mil 3Q20 4Q20 change

Total GGR 4,379 5,312 21.3%
Net revenues 3,204 4,341 35.5%
EBITDA -77 100 -230.6%
Reported net income -2,304 -2,400 4.2%

Source: BLOOM

EBITDA positive for 4Q20

On the positive side, BLOOM’s 4Q20 net revenues increased by 35.5% compared to
3Q20. Moreover, BLOOM reported an EBITDA of Php130 Mil for 4Q20, the first quarter it
generated a positive EBITDA since quarantines were put in place. We view this positively
as the company was finally able to generate enough revenues to pay for its cash operating
expenses, lessening the strain on its balance sheet. As revenues continue to grow, we
believe that BLOOM can sustain a positive EBITDA and survive despite the challenging
operating conditions.

COL Financial Group, Inc. 2

 EARNINGS ANALYSIS I BLOOM: DOWNGRADED TO HOLD AS RECOVERY STALLS

WED 10 MAR 2021

2021 unlike to see high provisions for doubtful accounts

Last year, BLOOM’s provision for doubtful accounts almost tripled from Php259.6 Mil
in 2019 to Php708.9 Mil in 2020. According to management, there were a few overseas
clients who had difficulty moving funds during the pandemic, as a result, management
conservatively provided for these accounts. This year, given the low volume in VIP gaming,
the credit extended to players is also significantly less thus they do not expect a repeat
of 2020 in terms of the high level of provisions.

Recovery to lag as restrictions remain in place, estimates

reduced

Despite the quarter-on-quarter improvement, the recovery of BLOOM is expected to fall

behind expectations as restrictions remain in place. We were previously expecting travel
and quarantine restrictions to ease at the start of this year as the number of infections
remained low towards the end of 2020. However, given the government’s conservative
stance and the slow pace of the vaccine rollout program, restrictions facing integrated
resorts will most likely remain in place for the most part of the year. As such, we adjusted
our 2021 revenue and net income forecasts to factor in limited operating capacity of
BLOOM for most of the year.

We reduced our 2021 net revenue forecast by 37.9% to Php21.71 Bil and now expect
BLOOM to post a net loss of Php4.30 Bil from a net profit of Php2.86 Bil previously. We
also reduced our FY22 revenue and net income forecast by 17.3% and 87.1% respectively.

Exhibit 3. Change in forecast

2021E 2022E
change change
in Php Mil Old New Old New
Net revenues 34,972 21,711 -37.9% 38,220 31,621 -17.3%
EBITDA 11,217 4,398 -60.8% 12,535 9,273 -26.0%
EBIT 7,527 998 -86.7% 8,845 5,873 -33.6%
Net income 2,859 -4,302 -250.5% 4,441 573 -87.1%
Source: COL estimates

COL Financial Group, Inc. 3

 EARNINGS ANALYSIS I BLOOM: DOWNGRADED TO HOLD AS RECOVERY STALLS

WED 10 MAR 2021

Reducing FV to Php8.60; Downgrade to HOLD

After factoring in our lower revenue and net income forecasts for 2021 and 2022, we
reduced our fair value estimate to Php8.60 from Php9.20. We also downgraded our
recommendation to HOLD from BUY as the implied upside to our new fair value estimate
is limited to just 10.3%. Further upside to our fair value estimate would come from a
successful vaccine rollout which would then result to the relaxation of quarantine and
travel restrictions and higher operating capacity for integrated resorts.

COL Financial Group, Inc. 4

 EARNINGS ANALYSIS I BLOOM: DOWNGRADED TO HOLD AS RECOVERY STALLS

WED 10 MAR 2021

Bloomberry Resorts INCOME STATEMENT (PHPMIL)

Corporation (BLOOM) Revenues

2016
27,590
2017
33,022
2018
38,220
2019
46,337
2020E
17,609
2021E
21,711
% Growth 10.2% 19.7% 15.7% 21.2% -62.0% 23.3%
COMPANY BACKGROUND Adjusted EBITDA 8,895 12,281 14,753 19,539 2,530 4,398
Bloomberry Resorts Corporation develops % Growth 171.8% 38.1% 20.1% 32.4% -87.1% 73.8%
Adjusted Operating Profit 4,040 7,928 11,124 15,850 (1,160) 998
tourist facilities, casino entertainment, and
% Growth -355.1% 96.2% 40.3% 42.5% -107.3% -186.1%
hotel and amusement-themed projects.
Interest Expense 2,223 2,152 4,582 5,562 5,168 5,410
Bloomberry Resorts Corporation owns Other Income/(Expense) (506) (948) (499) 29 (291) (150)
and operates Solaire Resort and Casino Net Income 2,357 6,071 7,188 9,955 (6,087) (4,302)
which is one of the four license holders in % Growth -170.1% 157.5% 18.4% 38.5% -161.1% -29.3%
Entertainments City. Solaire is currently the EPS 0.21 0.55 0.65 0.90 (0.56) (0.40)
% Growth -169.1% 161.0% 18.2% 38.5% -161.9% -28.9%
leading integrated resort in the Philippines.
Bloomberry also owns and operates Jeju BALANCE SHEET (IN PHPMIL)
Sun Hotel and Casino in Jeju, Korea. 2016 2017 2018 2019 2020E 2021E
Cash & Equivalents 14,326 21,961 36,466 74,718 65,359 53,980
REVENUE BREAKDOWN Receivables 2,958 2,283 2,806 5,207 1,979 2,440
Other Current Assets 1,233 1,662 1,194 1,254 1,317 1,383
Restricted cash - net of
2,252 2,251 - - - -
8%
current
PPE andportion
Investment
9%
Properties 44,491 42,471 82,700 90,425 94,150 98,165

2,256 2,158 2,483 2,509 2,537 2,566

Other Non-Current Assets
TotalfoodAssets
Payables
Hotel, and
and other
beverage 67,515 72,786 125,649 174,113 165,342 158,533
current liabilities
Gaming 8,771 9,246 16,929 18,622 20,484 22,532
ST Debts 1,714 2,727 2,068 2,205 2,205 2,205
Retail and others
Other Current Liabilities 1 2 4 4 4 4
LT Debts 32,112 29,373 69,119 106,914 103,498 100,083
Other Non-Current
772 1,153 969 988 1,008 1,029
9% Liabilities
83%
Total Liabilities 43,370 42,501 89,088 128,732 127,199 125,853
Total Equity 24,144 30,285 36,561 45,381 38,143 32,680
Hotel, food and beverage Total Liabilities & Equity 67,515 72,786 125,649 174,113 165,342 158,533
BVPS 2.19 2.75 3.32 4.12 3.46 2.97
Gaming
Retail and others
CASHFLOW STATEMENT (IN PHPMIL)
2016 2017 2018 2019 2020E 2021E
Pretax Income 3,982 6,295 7,039 10,109 (6,037) (4,262)
Depreciation & Amortization 4,855 4,354 3,629 3,690 3,690 3,400
Other Non-Cash Exp (Gains) (233) (225) (22) - - -
Interest Expense (Income) 2,179 2,085 4,441 5,853 5,459 5,560
Decrease (Increase) in Working Cap -3,001 846 7,358 -748 5,048 1,543
Operating Cash Flow 6,353 13,420 22,527 18,425 7,769 5,991
Capex -1,481 -1,802 -43,801 -9,720 -4,727 -5,025
Decrease (Increase) in other investments 158 -31 1,947 -26 -28 -29
Investing Cash Flow -1,322 -1,832 -41,854 -9,746 -4,755 -5,054
Proceeds (Payment) Debts -3,283 -1,882 38,670 37,932 -3,416 -3,416
Net proceeds from issuance of capital stock 0 0 0 0 0 0
Interest Paid -2,109 -2,049 -3,604 -7,257 -7,856 -7,800
Others -46 0 -1,300 -1,101 -1,101 -1,101
Financing Cash Flow -5,437 -3,931 33,766 29,574 -12,373 -12,316
Change in Cash -170 7,636 14,504 38,252 -9,359 -11,380

COL Financial Group, Inc. 5

 EARNINGS ANALYSIS I BLOOM: DOWNGRADED TO HOLD AS RECOVERY STALLS

WED 10 MAR 2021

INVESTMENT THESIS: RATIOS

2016 2017 2018 2019 2020E 2021E
Beneficiary of growing gaming sector
EBITDA Margin (%) 32.2% 37.2% 38.6% 42.2% 14.4% 20.3%
The local gaming sector is still in a growth
OPM (%) 14.6% 24.0% 29.1% 34.2% -6.6% 4.6%
phase and Bloomberry, the operator NPM (%) 8.5% 18.4% 18.8% 21.5% -34.6% -19.8%
of Solaire Resort and Casino, is a main Times Interest Earned (X) 1.8 3.7 2.4 2.8 -0.2 0.2
beneficiary of the trend. Solaire Resort and Current Ratio (X) 1.77 2.16 2.13 3.90 3.03 2.34
Casino is one of four integrated resorts in Net D/E Ratio (X) 0.81 0.34 0.95 0.76 1.06 1.48
Entertainment City and once all four are Days Receivable 39.1 25.2 26.8 41.0 41.0 41.0
Asset T/O (%) 40.9% 45.4% 30.4% 26.6% 10.7% 13.7%
completed, Philippines will make a better
ROAE (%) 10.3% 22.3% 21.5% 24.3% -14.6% -12.2%
case as a regional gaming destination,
which will benefit all operators.
MAJOR CORPORATE DEVELOPMENTS (5-YEARS)

Leader in the Philippine gaming sector Acquisition of 92% of Golden & Luxusy Co. Ltd., a hotel and casino operator
12/31/2015
Bloomberry is the leader in the Philippine in Jeju Island
gaming sector as Solaire has the most
gross gaming revenues (GGR) among the
four integrated resorts. In 2016, the GGR of
Solaire accounted for 44% of total GGR of
integrated resorts.

KEY RATIOS (IN PHPMIL)

COL Financial Group, Inc. 6

 EARNINGS ANALYSIS I BLOOM: DOWNGRADED TO HOLD AS RECOVERY STALLS

WED 10 MAR 2021

Valuation RELATIVE VALUATION

Methodology
EV/EBITDA EBTIDA growth
2021E 2022E 2021E 2022E
Bloomberry Resorts 29.2 13.8 207.6% 110.8%
Wynn Macau 21.6 14.4 -317.3% 50.0%
Sands China 23.3 14.3 24.6% 63.2%
MGM China 18.2 13.6 15.3% 33.9%
Galaxy Entertainment 27.7 17.5 -1191.7% 57.7%
Melco Resorts 16.0 9.9 -394.9% 61.1%
Crown Resorts 24.4 11.4 -744.2% 114.1%
Star Entertainment 11.8 10.1 183.3% 17.5%
Industry Average 21.5 13.1 -277.2% 63.5%
Industry Median 22.5 13.7 -151.0% 59.4%

VALUATION ASSUMPTIONS

DCF valuation
Risk Premium 6.5%
Risk Free Rate 4.0%
Beta 1.2
Cost of Equity 11.8%
Cost of Debt 7.5%
Tax Rate 0.0%
WACC 9.7%
Terminal Growth Rate 0.0%

PV of cash flows 105,339

Value of land 16,200
Enterprise value 121,539
Net debt -27,247
Net asset value 94,292
O/S 11,009
FV Estimate (Php) 8.60

COL Financial Group, Inc. 7

 EARNINGS ANALYSIS I BLOOM: DOWNGRADED TO HOLD AS RECOVERY STALLS

WED 10 MAR 2021

I MP OR TA NT R AT ING DEFINITIONS
BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the
next six to 12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might
be poor or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the
next six to twelve months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

I MP OR TA NT DISC L AIM ER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may
be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are
subject to change without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of
a security. COL Financial and/or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies
mentioned in this report and may trade them in ways different from those discussed in this report.

C O L R E S EAR C H T EAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

C O L F INANC IAL G R O UP, I NC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 8