Belle Corporation Q3 profit down 361%
Belle Corporation [BEL 1.40 unch] reported a Q3/21 net loss of P405 million, down 361% from Q3/20 profit of P155 million, and down 295% from Q2/21 profit of P208 million. BEL lists itself as a “developer of tourism and leisure destinations in the Philippines”, but the reality is that BEL’s fortunes are tied to the performance of its main asset, City of Dreams Manila, and that asset’s performance is tied directly to COVID movement restrictions that limit the ability of gamblers to place bets in the casino and spend money there.
BEL owns City of Dreams, plus Premium Leisure Corporation [PLC 0.43 unch], the casino license holder and operator for City of Dreams, and Pacific Online Systems Corporation (POSC), which leases betting systems and equipment to the Philippine Charity Sweepstakes Office. BEL also owns the Tagaytay Highlands complex. That said, the performance of this company is really derivative of how freely gamblers were able to enter BEL’s casino.
Yes, the 9M y/y numbers are better, but it’s plain to see that the reimposition of lockdowns and capacity restrictions to suppress the spread of the delta variant crushed BEL’s Q3 numbers. This makes sense, considering BEL is still on the hook for all of the costs associated with the City of Dreams property and buildings, regardless of whether or not the doors are open.
MB BOTTOM-LINE
In terms of bets, PLC has been the safer of the two given the earnings anchor that the City of Dreams casino property has proven to be for BEL during this pandemic. There is no doubt that the casinos will return to their winning ways once movement restrictions are a thing of the past, but until we can be confident that COVID and its variants won’t force future capacity restrictions, investors need to be eyes wide-open about the ability of the virus to absolutely demolish a quarter just like it did here during Q3 for BEL.
No amount of increased activity in the Tagaytay Highlands complex could offset the lost revenue of an empty City of Dreams facility.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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