Universal Entertainment Downgraded to B- as Casino Recovery Falters

The agency said the downgrade reflects weaker operating performance across both UE’s Philippine casino operations and its Japan-based gaming machine division. The outlook remains stable, indicating that S&P expects the company’s liquidity position to stay manageable in the near term despite mounting financial pressure.

UE recently issued a sharply revised earnings outlook for 2025, projecting group EBITDA of ¥18 billion (US$115 million). This marks a notable drop from the ¥21.2 billion forecast for 2024, which itself had represented significant year-on-year weakness. S&P now anticipates that EBITDA will remain subdued, hovering between ¥24 billion and ¥25 billion through 2026, far below earlier expectations for a stronger post-pandemic rebound.

The most persistent drag on performance continues to be Tiger Resort, Leisure and Entertainment Inc., UE’s subsidiary operating the group’s major casino resort in the Philippines. According to S&P, the business has posted double-digit gross gaming revenue (GGR) declines for consecutive years, driven by shrinking VIP activity, reduced visitor numbers from China, and intensifying domestic competition. EBITDA from the Philippine resort is projected to reach only ¥12 billion in 2025, with a moderate recovery to ¥15–16 billion anticipated in the following years—still well below the ¥19 billion it generated in 2024.

In Japan, UE’s gaming machine business is showing tentative signs of stabilization after several new models failed to pass compliance testing in 2024. S&P expects EBITDA from this segment to come in at around ¥12 billion in 2025, rising to roughly ¥15 billion from 2026 onward. Even so, this would represent only about 60% of 2023 performance, underscoring the lingering weakness in the division.

Despite the downward revenue trend, S&P believes UE’s liquidity will remain adequate. Cash and deposits rose to ¥27.4 billion as of September 2025, partly supported by asset sales and compensation inflows. Near-term debt maturities also remain modest, totaling ¥1–2 billion over the next 12 months.

However, the company’s leverage is expected to worsen. S&P projects UE’s debt-to-EBITDA ratio to deteriorate to around 10x by the end of 2025, and remain elevated through at least 2026. The agency warned that any additional weakening in EBITDA or a decline in cash reserves below ¥25 billion could trigger another downgrade. Conversely, an upgrade appears unlikely in the near future given the slow recovery in both major business segments.