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Tuesday, April 8, 2014

Belle Corporation: FY13 income boosted by one-off gains

Reported net income jumps to Php3.34 Bil. Belle reported a net income of Php3.63 Bil in FY13. This was boosted by numerous one-time gains. BEL received Php949.6 Mil from Melco booked as “termination fee”. This represents various costs Melco agreed to absorb in becoming the co-licensees of the project. BEL also recognized a Php2.32 Bil gain from the difference between the net investment in the finance lease and the construction cost of the building structures leased to MCP. Lastly, BEL recognized a Php772.2 Mil gain from the shares swap agreement with SM Land, wherein the shares of BEL in Highlands Prime were exchanged for shares of SMPH shares. Excluding the one-off gains, pretax income of BEL still grew 29% to Php923.42 Mil due to the interest income on its finance lease agreement with MCP.

Maintain BUY and FV of Php7.54. We reiterate our BUY rating on BEL despite the miss in
estimates. The miss was largely due to a Php283.5 Mil payment to Leisure and Resorts for the termination of its previous agreements. We believe that last year’s earnings has little to do with its future growth and profitability as the City of Dreams Manila is scheduled to open only in September this year. With Melco as its partner, BEL will be able to capitalize on the growing gaming industry in the Philippines which we believe is still at its infancy.

Source: Col Financial

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