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Name: Angelyn Remecial BSA-1 Subject: FinMan201 Date: December 11, 2024
Company Description
Belle Corporation (BEL) was originally incorporated in 1973 as Belle Mining and Oil Exploration, Incorporated (Belle Resources). In 1989, Belle Resources developed a golf club named Tagaytay Highlands International Golf Club, Incorporated, which became its initial foray into the property development sector. Thereafter, Belle Resources changed its name to the present one in 1994 to underscore the shift in its principal activity. The business of BEL, through subsidiaries and associates, include mainly real estate development, principally in the high-end leisure property market, gaming and various investment holdings.
On April 14, 2011, BEL acquired Premium Leisure & Amusement, Inc. (PLAI). PLAI is a grantee by the Philippine Amusement and Gaming Corporation of a license to operate integrated resorts, including casinos, in the vicinity of the Bagong Nayong Pilipino Manila Bay Entertainment City and the Newport City Integrated Resort.
In October 2012, BEL and PLAI entered into a cooperation agreement with Melco Crown Entertainment Limited and its Philippine affiliates (MCE), which placed BEL as a co-licensee and the owner of the land and buildings and MCE as a co-licensee and developer and operator of all the facilities within the resort complex effective March 13, 2013. A year later, MCE unveiled plans to name the integrated resort “”City of Dreams Manila”” after its flagship City of Dreams integrated resort in Macau’;s Cotai Strip. City of Dreams Manila was launched on February 2, 2015.
The Company';s other subsidiaries engaged in gaming and gaming-related activities are Premium Leisure Corp. and Pacific Online Systems Corporation.
VALUATION Market Statistics
Year Volume Value
2020 145,120,556 220,450,963.14
2019 249,394,274 579,515,016.87
2018 1,006,418,806 3,085,826,024.788
2017 699,506,118 2,642,563,767.66
2016 694,788,411 2,046,162,807.13
2015 796,533,146 3,084,588,254.95
*YTD= Year to Date
Issued Shares 10,560,999,857
Listed Shares 10,560,999,857
Outstanding Shares 9,696,464,297
Free Float Level 44.72%
Market Capitalization 16,290,060,018.96
ISIN PHY0775S1043
Issue Type Common
Listing Date Feb 02, 1977
Board Lot 1,000
Par Value 1
Foreign Ownership Limit 40%
Year End EPS 0.15
Year End EPS Period Dec 31, 2022
Interim EPS 0.27
Interim Period 9 months Sep-23
Note:
All values presented here are in PHP unless otherwise defined
Last Traded Price reflects the price at which the security was last traded within the day. The value is zero if the security has not been traded after its previous close.
Market Capitalization is equal to previous day’s close multiplied by outstanding shares.
Future Growth
Belle Corporation shows promising growth prospects, driven by its robust financial performance and strategic business initiatives. In 2023, the company’s consolidated net income grew by 42% to ₱2.4 billion, with significant revenue increases from gaming ventures, particularly its stake in the City of Dreams Manila. Belle’s acquisition of nearly complete ownership (99.55%) of Premium Leisure Corp. strengthens its gaming and integrated resort business. Additionally, the company Is exploring new developments on prime land adjacent to City of Dreams and sustainable projects in Tagaytay Highlands. With a strong balance sheet, low debt-to-equity ratio, and focus on sustainability, Belle is well-positioned to capitalize on future growth opportunities.
Past Performance
Belle Corporation’s past earnings performance has been lackluster, with its earnings declining at an average annual rate of -0.8%, in contrast to the Real Estate industry, which grew earnings by 9.3% annually. Similarly, revenues have decreased at an average rate of 2.1% per year, indicating a downward trend in overall financial performance. Despite this, Belle maintains a relatively high net margin of 34.2% and a return on equity (ROE) of 5%, reflecting some operational efficiency. Key metrics like quality earnings, growing profit margins, and accelerating growth have not consistently met benchmarks, although the company benefits from stable margins and strategic gaming ventures. Its performance falls short compared to industry peers in earnings growth and ROE.
Stock Performance for the last 6 months
The bar graph illustrates Belle Corporation’s earnings per share (EPS) trends from 2021 to 2024. Here’s an analysis of the data:
1. Fluctuating Performance: Belle’s EPS shows significant fluctuations over the years, with periods of losses (e.g., -₱0.12 in Q3 2021) and gradual recovery to consistent positive earnings in later years.
2. Recovery Phase: Starting in 2022, the company improved its EPS compared to prior years, indicating recovery from earlier declines. Notable highlights include a rise to ₱0.15 in FY 2022 and ₱0.20 in FY 2023. 3. Growth in 2023: The EPS growth in 2023, particularly in Q2 (₱0.27), marks a substantial improvement over the same period in 2022 (₱0.056), reflecting strong quarterly earnings performance.
This trend suggests Belle Corporation is on a recovery path, with marked improvements in its earnings during 2023 and beyond. However, the performance remains uneven, highlighting the need for consistent growth strategies.
Financial Health
Belle Corporation’s financial health demonstrates a mix of stability and challenges. On the positive side, the company maintains strong net margins of 34.2%, indicating effective cost management and profitability. Its conservative debt-to-equity ratio of 15% reflects prudent financial management, minimizing risks associated with high leverage. Additionally, stable cash flows from recurring income streams, particularly from gaming ventures like City of Dreams Manila and lottery operations, support its financial stability. However, the company faces challenges with declining revenues, which have decreased at an average rate of 2.1% annually, and earnings, which have fallen by -0.8% per year. Furthermore, Belle’s return on equity (ROE) is relatively low at 5%, suggesting inefficiencies in generating returns for shareholders. While the company is financially stable, addressing these issues is critical for long-term growth.
Financial Position Analysis
Belle Corporation is in a strong financial position regarding its ability to meet liabilities. Here’s an analysis:
1. Liquidity Strength: The company’s short-term assets of ₱13.4 billion comfortably exceed its short-term liabilities of ₱10.1 billion. This indicates that Belle is well-positioned to cover immediate obligations without financial strain.
2. Long-Term Stability: Belle’s short-term assets also surpass its long-term liabilities of ₱10.2 billion, highlighting a robust ability to manage long-term financial commitments.
3. Overall Financial Health: This surplus in assets relative to both short-term and long-term liabilities reflects a well-capitalized balance sheet and strong liquidity. It suggests that Belle has adequate resources to support operations, fund investments, and navigate economic uncertainties.
This solid financial footing provides the company with flexibility to pursue growth opportunities while maintaining operational stability. Debt to equity History
Belle Corporation’s debt management and coverage show a balanced approach, with both strengths and areas for improvement:
1. Debt Level: The company’s net debt-to-equity ratio of 16% is considered satisfactory, indicating a manageable level of debt relative to equity. This provides Belle with financial flexibility, as it is not overly reliant on debt for financing. 2. Increasing Debt: Over the past 5 years, Belle’s debt-to-equity ratio has risen from 22.7% to 25.7%. While this increase is relatively modest, it does indicate a trend toward higher leverage. This may signal a need for careful monitoring to ensure that debt levels do not rise too quickly and strain future financial stability. 3. Debt Coverage: Belle’s debt is well covered by operating cash flow, with a coverage ratio of 40.9%. This suggests that the company generates enough cash from operations to comfortably meet its debt obligations, reducing the risk of financial distress.
4. Interest Coverage: The company’s interest payments are well covered by EBIT (Earnings Before Interest and Taxes), with a coverage ratio of 4.1x. This indicates that Belle’s earnings are more than sufficient to meet its interest expenses, providing a cushion against fluctuations in earnings.
Overall, Belle Corporation’s debt levels are manageable, with good coverage ratios for both debt and interest payments. However, the upward trend in its debt-to-equity ratio should be watched to ensure it does not lead to higher financial risks.
Balance Sheet
i Belle Corporation’s balance sheet demonstrates a strong financial position, particularly in managing its liabilities and assets. As of 2020, the company had assets that covered 10% of its current liabilities and 14% of its total debt, indicating a solid cushion despite external challenges like the pandemic. The debt-to-equity ratio has remained conservative, standing at 23% in 2020, down from 29% in 2019, reflecting the company’s ability to control leverage.
Belle’s short-term assets also exceed both short-term liabilities and long-term liabilities, with short-term assets of ₱13.4 billion versus short-term liabilities of ₱10.1 billion, and long-term liabilities of ₱10.2 billion. This suggests that the company is in a favorable liquidity position, capable of covering its immediate obligations. Moreover, Belle’s debt is well covered by operating cash flow (40.9%), and interest payments are comfortably covered by its EBIT (4.1x coverage), showcasing robust financial health.
Dividend
Belle Corporation’s dividend policy indicates a minimal focus on returning cash to shareholders in the form of dividends. The company currently offers a dividend yield of 0%, with a dividend per share of ₱0.060. The payout ratio is also 0%, meaning Belle is not currently distributing any profits to shareholders. This aligns with the company’s decision to retain earnings, possibly for reinvestment into its growth strategies or to maintain liquidity for its gaming and real estate ventures.
In terms of shareholder returns, Belle has a buyback yield of 1.4%, suggesting that it is repurchasing some of its shares from the market to reduce outstanding shares. This buyback activity may reflect an effort to boost shareholder value by increasing earnings per share or supporting the stock price. However, overall, the total shareholder yield remains relatively low at 1.4%, which is indicative of Belle’s strategy to prioritize internal investments and business growth over dividend distributions.
The absence of future dividend guidance and the lack of clear dividend growth make it uncertain whether dividends will become a consistent part of Belle’s shareholder returns in the near future.
Stability and Growth
Belle Corporation’s dividend strategy appears unclear due to insufficient data on the stability and growth of its dividend payments. Currently, there is no available historical data to evaluate whether its dividends per share have been stable or growing over time. The payout ratio is 0%, and no future dividends are planned, which suggests that the company has not prioritized dividend payments recently.
This could be a result of Belle’s strategy to reinvest profits back into the business rather than returning capital to shareholders, especially as it continues to focus on its gaming and real estate operations. The lack of consistent or increasing dividend payments may be a signal that the company is prioritizing capital growth or maintaining liquidity. Without clear historical trends, it’s difficult to assess the company’s commitment to a stable or growing dividend policy in the future.
Dividend yield vs. Market yield
Belle Corporation’s dividend yield of 0% places it significantly below both the bottom 25% of dividend payers in the Philippine market (2.0%) and the industry average for real estate companies (2.3%). This suggests that Belle is not prioritizing dividend distributions at the moment, especially when compared to other companies in the same sector.
Moreover, its dividend yield is substantially lower than that of the top 25% of dividend payers in the Philippines, who offer a yield of 6.6%, further highlighting Belle’s minimal focus on rewarding shareholders with dividends. The analyst forecast for Belle over the next 3 years also indicates a 0% dividend yield, reinforcing the company’s trend of withholding payouts in favor of reinvesting earnings.
This lack of dividend payouts may signal that Belle is prioritizing internal growth, such as expanding its gaming and real estate projects, rather than providing immediate returns to shareholders through dividends. Without any recent payouts or clear growth in dividends, investors seeking income from dividends might not find Belle appealing at this time. Earnings payout to shareholders
Belle Corporation is not paying a notable dividend, which indicates that its earnings are not being distributed to shareholders in the form of regular payouts. This could be due to several reasons, including the company’s preference for reinvesting earnings into growth projects, especially in its real estate and gaming sectors, rather than offering dividends.
In the context of the Philippine market, where dividends are a common form of shareholder reward, Belle’s 0% dividend yield places it well below both the industry average (2.3%) and the market’s bottom 25% (2.0%). This suggests that Belle’s dividend policy is atypical for the market, and it may not be appealing to income-focused investors who rely on dividends for returns.
Furthermore, Belle’s earnings coverage for dividends is effectively irrelevant at this time, since the company has not declared any meaningful dividends in recent years. This lack of payouts may suggest that Belle is more focused on capital growth and business expansion than on providing immediate returns to shareholders. Cash Payout to Shareholders
Belle Corporation’s cash flow coverage of dividends is not applicable at the moment because the company has not reported any dividend payouts in recent years. This lack of dividends means it is impossible to assess how well the company’s cash flows could support sustainable dividend distributions. Typically, companies with regular dividend payouts should have strong cash flow coverage, ensuring they generate sufficient operating cash flow to support these payments.
Since Belle is not currently paying dividends, investors and analysts cannot evaluate the sustainability of any future dividends based on the company’s cash flows. The company may prioritize reinvestment of its earnings into growth and expansion, particularly in its real estate and gaming ventures, rather than distributing profits to shareholders. Consequently, Belle’s strategy seems to focus more on capital growth and long-term value creation, rather than immediate returns through dividends. Operational set-up
Armin Antonio Raquel-Santo
Chief executive officer
Leadership Team
Armin Antonio Raquel-Santos
President ₱1.28m
Aileen Malto CFO & Treasurer
Rosemarie Abueva Senior Assistant Vice President of Accounting
Nancy Hui Vice President of Administration
Michelle Angeli Hernandez
Chief Risk Officer
Maria Clare Kramer
Business Unit Head of Estate Services
Shirley Ong Business Unit Head of Resort Residences
Mary Eleanor Mendoza
Business Unit Head of Real Estate Group Anna Josefina Esteban Chief Audit Executive
Jason Nalupta Corporate Secretary
Ownership
Top Shareholders Top 25 shareholders own 65.2% of the company SM Investments Corporation 26.9% Sysmart Corp. 16.8% Sybase Equity Investments Corp. 5.48% Social Security System, Asset Management Arm 4.56% Eastern Securities Development Corporation 1.67% Jacinto Ng 1.4% Winterfell Holdings Inc 1.3% OCX Development Corporation 1.26% Premium Leisure Corp. 1.03% Jacinto Ng 0.92% Parallax Resources, Inc. 0.89% Willy Ocier 0.87% SLW Development Corporation 0.68% F. Yap Securities, Inc., Asset Management Arm 0.6% Dimensional Fund Advisors LP 0.55% Anita Ng 0.094% Lim Kim 0.064% James Go 0.05% Joseph Tan Chua 0.045% William Gabaldon 0.041% Pacita Yap 0.036% Virginia Yap 0.0016% Acadian Asset Management LLC 0.00056% Laurito Serrano 0.0001% Jackson Ongsip 0.0001%
