March 23, 2015

RWM posts P5.44b net income in 2014

In a disclosure to the Exchange today, Travellers International Hotel Group Inc (RWM) said its net income almost doubled to P5.445b in 2014. Netting out the extraordinary items pertaining to loss on interest rate swap last year, we estimate core earnings would have still increased by 54%. This came despite the 5.8% YoY decline in net revenues to P29.06b which was mainly due to the 5.4% decrease in gaming revenues to P28.38b and 9.5% drop in hotel and F&B revenues to P2.264b.

Total drop volume declined by 5% to P680.66b, with VIP table volumes falling 7.4% YoY that more than offset the 5.1 % hike in volumes (to P142.156b) from mass tables, slot machines and electronic table games. 142156.

Earnings were aided by the slight decline (1.2%) in promotional allowances as the company held fewer tournaments and focused on higher margin mass market. EBITDA rose 18% to P7.9b and EBITDA margin improved to 27.2% from 21.8% in 2013.

Our take: The results were largely in line with our estimates, with the net income being 0.3% off our expectations. But this trailed the consensus forecast by about 4%. The company said the decline in gaming revenues were in keeping with its move to focus on higher margin business but we believe it also reflects the higher competitive pressures that the company is facing (which we have factored in our numbers).

While the results are largely in line with our estimates, we will be recasting our operating numbers to factor in the company’s decision to restore the licencing fees prescribed in its contract with the PAGCOR following the Supreme Court decision tor restore the regulator’s corporate income tax exemption. – WealthSec