International Entertainment Corp. (IEC) is making a bold move in the Philippine gaming industry, investing heavily in the acquisition and renovation of a casino in Manila. Despite a series of profit warnings and widening losses, the company's revenue has shown robust growth. This strategic gamble aligns with the Philippine government's privatization efforts of its state-owned casinos, presenting both significant risks and potential rewards for IEC as it aims to become a major integrated resort operator.
International Entertainment Corp. Bets Big on Manila Casino amidst Privatization Drive
In a significant development for the gaming and hospitality sector, International Entertainment Corp. (IEC) is undertaking a massive investment in the Philippines. The company announced its fifth profit warning in two years last week, indicating a projected pre-tax loss of at least HK$260 million ($33.4 million) for its fiscal year ending June, a notable increase from the HK$162.2 million loss reported in the previous year. Despite these financial setbacks, market observers are focusing on the long-term prospects. IEC's stock remained relatively stable following the announcement, suggesting investor confidence in its strategic direction.
The current financial strain on IEC stems from various factors, including heightened general and administrative expenses, increased marketing outlays for the casino, and a significant write-off associated with ongoing renovations. These costs are directly linked to the company's ambitious plan to acquire and manage the casino adjacent to its New Coast Hotel property in Malate, downtown Manila, a deal finalized in May 2024. This acquisition marks IEC's entry as a 'first-mover' in the privatization of the Philippine Amusement and Gaming Corp.'s (Pagcor) extensive portfolio of 43 state-owned casinos. Pagcor aims to generate at least 50 billion pesos ($870 million) from these sales.
IEC has committed to investing between $1 billion and $1.2 billion in transforming the 26-year-old New Coast Hotel, formerly the Hyatt Regency Hotel & Casino, into an integrated resort hotel offering family entertainment alongside its gaming facilities. This renovation is a primary driver of the company's recent losses, explaining why investors might be willing to overlook current performance in anticipation of future returns. While net income for the period almost tripled from HK$36.1 million to HK$95 million, its cash reserves surged from HK$617 million in June 2024 to HK$855 million by the end of December 2024.
IEC's involvement in the Philippines dates back to 2007, with previous ventures including a casino hotel and a land plot in Manila. The company, initially an internet content creator named HKcyber.com, evolved into International Entertainment Corp. after acquiring an independent film production company. Under the leadership of former chairman Stanley Choi, IEC expanded its reach by securing rights to PokerStars LIVE gaming events across Asia. Current CEO Ho Wong Meng, former chairman of Frontier Capital Group, now steers the company's strategic course.
The Philippine gaming market, while smaller than Macau or Nevada, showed significant growth in 2024, with Pagcor generating record revenues of 112 billion pesos ($1.9 billion), a 41% increase from 2023. The total gaming industry in the Philippines achieved 410 billion pesos in gross gaming revenue in 2024, an impressive 25% rise. Despite intense competition from established players in Manila's Entertainment City, such as Melco Resorts & Entertainment and Bloomberry Resorts, IEC's move into casino ownership positions it to capitalize on the robust regional potential of the Philippine gaming market.
This strategic venture by International Entertainment Corp. into the Philippine casino market presents a fascinating case study in calculated risk-taking within the global entertainment industry. The substantial investment, despite initial financial losses, underscores a belief in the long-term growth trajectory of gaming in the region. It highlights how companies are leveraging government privatization initiatives to reshape their business models and compete in burgeoning markets. The success of IEC's gamble will not only determine its own future but could also serve as a blueprint for other international firms looking to tap into the dynamic Asian gaming landscape.