S&P Global Ratings has flagged serious concerns over Okada Manila underperformance, along with other struggling businesses under Universal Entertainment Corp. In a recent credit review, the agency revised its outlook from stable to negative, citing poor cash flow, weak margins, and rising operational risks.
The company’s debt metrics are also worsening. S&P now expects Universal’s debt-to-EBITDA ratio to breach 5.0x by the end of 2025—well beyond the range previously considered stable. This signals deeper financial trouble ahead unless Universal quickly turns things around.
Despite Okada Manila generating solid gaming revenue, the bottom line tells a different story. Costs continue to rise, and regulatory issues in the Philippines show no signs of easing. Even though the group posted over JPY 28 billion (around US$173 million) in EBITDA for 2023, it still failed to produce positive free cash flow. That gap between earnings and available cash is now a major red flag.
Compounding the issue, uncertainty around ownership and governance at Okada Manila continues to cloud the resort’s future. Ongoing disputes and scrutiny from the Philippine Amusement and Gaming Corporation (PAGCOR) have added more pressure to an already fragile setup.
S&P noted that while Universal has taken steps to improve efficiency and cut costs, these efforts may not be enough. Without a significant rebound in profit margins and sustained free cash flow, further downgrades are likely.
For now, Okada Manila underperformance remains a key risk not just to Universal Entertainment’s balance sheet, but also to its long-term viability in the Philippine gaming sector. The next year will be critical for the group to stabilize its operations and regain financial footing.
