UPDATE 2-Philippine casino firm Travellers disappoints in market debut

Tue Nov 5, 2013 5:03am EST

* Shares finish 0.2 pct below IPO price

* Some investors not keen on gaming issues, tax issue weighs

* Travellers' valuations higher than rival Bloomberry

* Outlook for Robinsons listing on Monday unclear (Recasts with weak finish, adds background on tax issues)

By Rosemarie Francisco and Erik dela Cruz

MANILA, Nov 5 (Reuters) - Philippine casino operator Travellers International Hotel Group Inc ended below its IPO price in its market debut, hurt by the reluctance of some investors to pick up gaming stocks and unresolved tax issues for the sector.

Some market participants also blamed a cooling in investor sentiment towards emerging markets amid fears that the U.S. Federal Reserve will begin tapering its bond-buying stimulus programme sooner rather than later.

That could bode ill for next Monday's listing of department store and supermarket operator Robinsons Retail Holdings Inc , which raised $650 million in the country's largest ever initial public offering.

Although Philippine companies have raised a record $1.35 billion from IPOs this year, both Travellers, which raised $470 million, and Robinsons saw their IPO fund raising scaled back drastically from initial hopes on cooler sentiment towards emerging economies.

Travellers' shares closed at 11.26 pesos, 0.2 percent lower than its IPO price of 11.28 pesos. The broader market declined 0.4 percent.

TAX SPECTRE

Analysts and fund managers noted, however, that Travellers' debut was hamstrung by factors specific to the company.

"It being a gaming name, we also have a lot of clients who are mandated not to invest in such names," said Vittorio Gomez, vice president and fund manager at Rizal Commercial Banking Corp. "I don't think you can use the performance of Travellers as a benchmark for the performance of Robinsons."

In addition, the casino sector has suffered after the nation's tax bureau in April said it wanted gaming companies to pay income tax. The firms have until now only paid a 5 percent franchise tax on gross gaming revenues.

Travellers valuations are also relatively high, with its forward price to earnings ratio estimated at 21.5 times, higher than local rival Bloomberry Resorts Corp's 17 times.

"The valuation was not compelling, not exciting enough to merit strong demand on its first day," said Jose Mari Lacson, research head at Campos, Lanuza & Company Inc.

Travellers, a venture between casino operator Genting Hong Kong Ltd and Philippine conglomerate Alliance Global Group Inc, will use the IPO proceeds to expand Resorts World Manila, the first integrated casino-entertainment complex in Manila. It will add a convention centre, 1,100 hotel rooms and more gaming facilities.

Manila is seeking to position itself as an alternative to established gaming centres in Asia such as Macau.

A 100-hectare Entertainment City gaming complex houses Bloomberry's Solaire casino-resort and will be home to a Melco Crown Philippines Resorts Corp next year.

Travellers also aims to start construction of a second casino-resort in the Entertainment City complex next year, to be completed by 2017 at the earliest.

In addition to Robinsons, three other Philippine firms will list this year. Resort hotel owner Discovery World Corp, appliance maker Concepcion Industrial Corp and Frontier Oil Corp aim to raise a combined $130 million from their IPOs.

Bank of America Merrill Lynch, CIMB, Maybank , Religare and UBS were joint global coordinators, international bookrunners and international lead managers for the Travellers' offer. (Editing by Edwina Gibbs)