May 06, 2014

BEL posts P309m net income for 1Q14

In its 1Q14 quarterly report, BEL announced net income of P309m which was 60% lower YoY due to a one time termination fee income in the previous year. Recall that last year, BEL was forced to change the lease arrangement recognition in its books due to the adoption of PAS17 accounting standard. If we strip out this gain, BEL’s net income would have been 174% higher YoY due to the start of rental payments paid by MCE for the lease of BEL’s property.

Our take: Unlike other casino plays, BEL is already net income positive even before the actual opening of its integrated casino resort due to the lease arrangements it has with MCE which kicked in late last year. Should the City of Dreams successfully launch in the latter half of the year, this will provide a big boost to BEL’s earnings. BEL will be entitled to 50% share in EBITDA or 15% of net win whichever is higher in addition to the rental payments it is already receiving. – WealthSec