Alliance Global makes push to join 'Powerhouse League'

MANILA, Philippines -  Alliance Global Group Inc.’s growing gaming operations will put real estate tycoon Andrew Tan’s flagship firm in the same league as ‘powerhouse conglomerates’ Ayala Corp., SM Investments Corp. and San Miguel by 2013 or 2015, according to online brokerage firm Citiseconline.com.

“In the next three to five years, we reckon that AGI’s revenue and net income will be racing towards that of larger conglomerates like Ayala Corp. Its branding strategy will also make it a household name,” said The Private Clients Group (PCG) in a study. 

The PCG is the premium broking advisory service offered by Citiseconline.com, headed by John Gatmaytan and George Wong.

Citiseconline expects AGI’s net earnings to hit P13.76 billion this year, driven by gaming revenues with strong support from its real estate and food businesses. Its market capitalization is likewise seen to grow P108.67 billion.

Citiseconline estimates that gaming operations under 50 percent-owned unit Travellers International, would contribute P7 billion in net income to AGI in 2011. 

Travellers International is the developer of Resorts World Manila, the first integrated tourism complex in the country, located across from NAIA Terminal 3 at the Newport City cyber tourism zone in Pasay City.

For comparison, Ayala Corp. was forecast to post a net profit of P10.3 billion, SMIC P20.35 billion, and San Miguel P25.73 billion, this year.

“As a conglomerate, we think that AGI is best positioned as a bet on a surging and hopeful Philippine economy under the new administration. Its exposure to upward looking sectors in property, fast food, alcoholic beverages and tourism are bets on consumption demand, for which usual proxies in the stock market have lost prominence, given the disappearance of San Miguel as we know it (until it resurfaces sooner or later), and the one-dimensional quality of Jollibee,” Citiseconline said.

“With this level of earnings, we reckon the shares be worth between P18 and P22 per share, valuing the company between 12.5 times to 15 times 2011 price-earnings-ratio,” Citiseconline added.

The PCG also attributed AGI’s flourishing casino business to the Genting Group of Malaysia, which coughed up $335 million in cash for a 50-percent ownership in Travellers International.

“Genting has been in the casino business for 40 years. It has grown beyond its Malaysian roots and is now a global gaming and entertainment company. It has operational casino and gaming presence in Australia, the Bahamas, London and New York. Closer to home, it operates the Universal Studios Singapore and Resorts World Sentosa; the original Genting Highlands Resort in Malaysia; Star Cruises and the Norwegian Cruise Lines.

 “We think the affinity to Genting will accelerate the attention to, and acceptance of, AGI as an investment among foreign portfolio managers,” Citiseconline said.

AGI is expected to benefit from increasing tourist arrivals given the country’s very competitive gaming tax structure, which makes it more profitable for junket/tour operators to bring players to come and consider Manila first, before flying to either Macau or Singapore.   

In the nine months ending September 2010, AGI reported a net income of P5.39 billion, up 63 percent on the back of a 27-percent rise in revenues.

Among AGI’s other subsidiaries include Megaworld Emperador Distillers and Golden Arches Development Corp.

Emperador Distillers produces top brandy brands Emperador and Generoso and newer labels while Golden Arches is the master franchise holder of McDonald’s in the country.