Morgan Stanley has pointed out that supply is not keeping up with demand in the Philippine casino industry, but deemed it “not a concern” for the near future.
The financial services firm reckons that by being the “fastest growing in Asia,” with a likely 25 percent compound annual growth rate for casino GGR in 2017-18, the Philippines market is nearing saturation point.
However, due to new supplies of venue space, strong tourist arrivals and a vibrant and dynamic economy, Morgan Stanley downplayed the threat.
“Strong tourist arrivals and the Ninoy Aquino International Airport Expressway have brought in more Chinese and Filipino mass customers from cities outside of Manila, respectively,” said Morgan Stanley in a memo, referring to an recently opened expressway system in Metro Manila, linking the Ninoy Aquino International Airport to Entertainment City, the country’s casino district.
“[But] we are not concerned about cannibalisation, which is not visible in the second quarter.”
Data released by the Philippine Statistics Authority showed that the Philippine economy grew 6.5 percent in the second quarter as agriculture recovers and government spending picks up.
In fact, the Philippine GDP growth rate is second only to China so far among major Asian economies.
The growth has been a boon to the Philippine casino industry, as more local players are heading to the integrated resorts, Morgan Stanley added.
The firm predicts that the country’s casino gross gaming revenue will see a 25 percent compound annual growth rate in 2017 to 2018.
The memo followed a group conference call organised by the bank for approximately 50 investors, including Laurence Hawke, the chief financial officer of Entertainment City’s Okada Manila resort.
Okada Manila, which had a soft launch last December, is predicted to outpace other integrated resorts in the capital by 2019 as it captures 32 percent of the market share and add $1.2bn of GGR by 2019 to the overall market.