July 31, 2023

PLC

PLC has maintained its earnings momentum this 2nd quarter of the year. PLC earned at least 600 million PHP in the 2nd quarter after earning more than 500 million PHP in the 1st quarter. This brings a total of around 1.25 billion PHP for the first half of this year as per their disclosure. What’s interesting is that they have earned all this in just 6 months whereas the 1.25 billion PHP is their annual net income a year ago. That being said, there is a high probability that they would hit at least 1.5 billion PHP at the end of the year.

PLC needs at least 1.5 billion PHP to sustain the annual dividend of 0.05 PHP/sh. For the first half of this year, they already have saved 1.3 billion PHP in cash and they’re getting close to the dividend target. If the earnings momentum continues for the next two quarters, then the dividends for 2023 are secured. PLC is currently benefitting from the reopening of tourism hence the improvement in casino operations. The Philippines however failed to be the preferred destination for Chinese tourists as per recent studies and historically they’re the ones who drive the gaming segment earnings. For this year, it is the rapid return of the Koreans that is driving the recovery of the gaming segment. Tourist arrivals from Korea are nearing pre-pandemic levels as per an analyst report 2 months ago.

The dividends are probably secured for 2023 but PLC’s performance in 2024 is something we have to watch out for. PLC mostly gets their dividends from saved cash hence even if they have been earning less than 1 billion PHP since the pandemic, they were able to sustain the dividends amounting to more than what they earn. The 1.3 billion PHP cash that PLC has right now is from the recent earnings and earnings since pre-pandemic which used to be around 3.7 billion PHP. That said, we can see the trend that PLC’s cash is on a downtrend and it was just fortunate that COVID-19 restrictions and quarantine have eased which would at least give time for PLC to recover.