April 08, 2014

One-off items boost BEL’s 2013 net income

Based on its disclosure to the Exchange, Belle Corp (BEL) reported a consolidated net income of P3.64b in 2013 from P556m in 2012. The results were boosted by the P2.32b Day-1 gain on finance lease accounting related to its lease and operating agreements with the local units of Melco Crown Entertainment Ltd (MCE).

It also booked P950m in termination fee from MCE pertaining to costs of including the latter as co-licensee of the integrated resort complex project which is now named City of Dreams Manila. BEL also booked P157m in current lease income on the 6.2 hectares of leased land on which the resort is built and P1.18b in interest income on finance lease accounting for the 17 hectares of building space for the project. BEL’s 2013 results also included a P772m gain arising from the swap of its 809m Highlands Prime shares into 106m shares of the expanded SM Prime Holdings Inc.

Our take: BEL’s earnings will take an entirely different structure upon the opening of the City of Dreams Manila later this year when it will be booking its share of EBITDA from the operations of the facility.

This should more than compensate for the declining income from its traditional real estate business. In 2013, sales of real estate and club shares declined 46% YoY to P175.2m. There were no new real estate projects launched by the company for the past two years. – WealthSec