Ratings agency Fitch has revised down the outlook for Japan’s Universal Entertainment Corp (UEC) from Stable to Negative, pointing to the absence of a clear recovery path for the company’s Philippines integrated resort, Okada Manila.
The resort’s operator, Tiger Resort, Leisure and Entertainment Inc (TRLEI), recently reported a 19.6% year-on-year fall in gross gaming revenues to Php7.10 billion (US$125 million) – also 9.1% lower than 1Q25 – amid a broader Manila-wide decline in VIP gaming and lower visitation to the Philippines from key source markets South Korea and China.
Fitch said that the revised outlook on UEC’s Long-Term Foreign-Currency Issuer Default Rating (IDR) came on the back of Okada Manila’s “unexpectedly weak financial results in 2024 and the absence of a clear near-term recovery path in its integrated resort segment.
“Fitch expects subdued EBITDAR, higher adjusted leverage and reduced coverage metrics to weigh on UEC’s credit profile,” it added.
As a result, the agency has “lowered our financial forecast for [Okada Manila] following a review of 1Q25 results. Casino visitation remains subdued and both VIP and mass-market segments’ performance has stagnated. Intensifying local competition has created additional challenges, raising the risk of further setbacks in earnings growth for UEC’s IR operations.
“Fitch sees no clear trajectory for a near-term recovery in the IR segment, which is a key driver of the Negative Outlook.”
According to Fitch, UEC’s pachinko segment is providing more consistent earnings although challenges remain from delays in new product launches due to regulatory and inspection hurdles, and a shrinking player base amid Japan’s ageing population. While unit sales fell in 2024, a modest near-term recovery is envisioned due to the launch of new pachislot and pachinko products, “although the structural decline in the end-market poses longer-term risks”.
RelatedPosts
