Stock Commentary: PH Resorts Group Holdings voluntarily suspends its PAGCOR license for Clark Global City casino

The integrated casino/resort developer, owned by Udenna (Dennis Uy), said that it was voluntarily suspending its gaming license with PAGCOR for its Clark Global City casino project, under subsidiary Clark Grand Leisure Corp, due to “lingering uncertainties surrounding the casino gaming industry”, and also the presence of “more competition” in the Clark Global City casino gaming market.

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PH Resorts Group Holdings [PHR 1.21 1.68%] said that the suspension of this license would allow it to “focus all efforts for the construction and development” of its Emerald Bay Resort and Casino in Mactan, Cebu.

PHR refers to this project as its “flagship”. PHR added that the suspension would be indefinite and the length of which would be at PHR’s discretion, but that any future lift of the suspension would require PAGCOR approval.

PHR added an amended disclosure later in the day to say that since its financial projections are “centered” on the Emerald Bay project, the suspension of the Clark Global City casino project will have “no impact” on PHR’s financials and “little to no impact” on the business of PHR.


MB BOTTOM-LINE

I’ve raised my issues with PHR’s fast and loose capitalization strategies in the past, and it’s the PSE’s worst-kept secret that some of Dennis Uy’s public companies are struggling under the weight of the extraordinary debt that he took on to finance the outrageous expansion of his empire.

PHR parent company Udenna, Dennis Uy’s private personal holdco, has been at the center of the action with DITO CME [DITO 7.74 8.56%]2Go Logistics [2GO 8.06 0.37%]Chelsea Logistics [C 2.19 0.45%], and also with PHR, when Dennis Uy sold himself (through Udenna) almost 1.7 billion shares of PHR just days after having sold 0.4 billion shares to the public in a FOO.

So, on the one hand, it’s absolutely true that there are “lingering uncertainties” with the gaming industry in the Philippines (to put it lightly), and that there’s probably some competition in the area… but on the other hand, given the context, it’s hard to look at this and not assume that something is off with Emerald Bay’s development progress or PHR’s financing of that project that would necessitate this kind of license suspension.

Clark Global City is owned by Udenna; how could it be surprised or threatened by competition in this area? Again, I’m not saying that something is wrong here, but I am certainly seeing a few red flags of the kind that are often flown by ships in Dennis Uy’s fleet. His team must be doing amazing work behind the scenes to keep Udenna’s sprawling patchwork of operations and debt going. 

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Merkado Barkada’s opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.



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