Our target price on BLOOM of P4.90/share is set using an equal blend of SOTP and DCF valuations. To derive our SOTP valuation (of P2.56/sh), we apply a target multiple of ~6.4x to our 2026E EBITDA forecast on Solaire and Solaire North, equivalent to a 1 S.D. discount to its historical average (consistent with our approach for most of the Macau gaming stocks under our coverage). Our DCF-implied valuation is P7.16/sh, assuming a beta of ~1.3 and WACC of 8%, with a 2% terminal growth rate.
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Downside risks that may prevent the BLOOM stock from achieving our target price include: 1) Regulatory risks to licensing, operating rules, and particularly the tax regime; 2) Any slowdown in development of the Manila Bay gaming cluster; 3) Any political instability in the Philippines or in its relations with neighboring countries could impact visitation; 4) Regulators/authorities in the Philippines may show increased scrutiny on anti-money laundering as new integrated resorts commence operations; and 5) Travel and tourism could also be disrupted by natural disasters (earthquakes, typhoons, volcanic eruptions), epidemics, or any other unforeseen events.
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