Hong Kong-listed casino operator and developer NagaCorp Ltd posted a 20.3 percent year-on-year increase in net profit to US$150.6 million for the six months to June 30. The growth was fuelled by a 39.6-percent jump in gross gaming revenue (GGR) – to US$386.8 million – at its NagaWorld casino property, the firm said in a Monday filing.
The group declared an interim dividend/distribution of US$0.0208 per share/conversion share for the period. The interim dividend and distribution are scheduled to be paid on August 22.
NagaWorld – located in Cambodia’s capital Phnom Penh – posted “robust business volume growth” across the majority of its business segments, the filing stated. VIP rolling chip turnover increased by 70.7 percent in year-on-year terms to US$7.77 billion, stated the firm. The win rate for the period stood at 2.7 percent, it added. This translated into an 88.6 percent increase in VIP revenue to US$210.5 million during the period.
The group also achieved strong growth in the mass market segment: revenue from main floor tables increased 20.2 percent year-on-year to US$74.5 million.
“This business volume growth [in mass market] is attributable to the improved headcount at NagaWorld as a result of visitation and tourism growth into Cambodia, particularly from China which recorded 36 percent growth in the first five months of 2017,” NagaCorp said.
Nonetheless, revenue from electronic gaming machines at NagaWorld declined by 1.6 percent to US$101.8 million during the period.
As of June 30, NagaWorld had 239 gaming tables and 1,660 electronic gaming machines in operation.
In addition, the property featured an additional 570 third party-operated machines; NagaCorp reported earning US$60.0 million in the first half of 2017 from that licensing deal, the same amount it earned in the prior-year period.
Those 570 machines are to be “strategically located at certain areas” of an upcoming extension to NagaWorld – referred to in filings as the “TSCLK Complex” – the firm stated. The extension will have extra hotel space as well as extra gaming capacity.
The TSCLK Complex – also known as “Naga2″ – is undergoing fit-out and is expected to be operational in the fourth quarter of 2017, NagaCorp stated in the Monday filing.
Positive business environment
The overall growth in business volumes and GGR in the first half of 2017 was attributable to several factors, NagaCorp stated.
It added: “First, continued confidence in the political climate and social order of Cambodia’s operating environment leads to favourable economic conditions and increasing visitation, especially from China. Second, confidence in the operating environment leads to increasing economic activity, resulting in increasing numbers of investors and a growing expat[riate] population in Phnom Penh and driving footfall into NagaWorld. Third, as a result of the completion of Naga2, the company’s balance sheet has strengthened.”
Naga2 is likely to produce US$113 million in incremental earnings before interest, taxation, depreciation and amortisation (EBITDA) during 2018, its expected first full year of operation, said a June note from brokerage Union Gaming Securities Asia Ltd.
Non-gaming revenue at NagaWorld increased by 29.8 percent year-on-year to US$14.8 million in the first half of 2017, “primarily from higher occupancy and average room rates as well as better performance across all the food and beverage outlets,” NagaCorp said.
The firm is also developing a casino resort in the Primorye Integrated Entertainment Zone (IEZ), close to the Russian Pacific port city of Vladivostok. “An office has been established in the city centre of Vladivostok… and certain key personnel have been appointed to monitor various aspects of the progress of the project which remains broadly on schedule for operation by 2019,” NagaCorp stated in Monday’s filing.
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”We do not believe that reopening the advance notice nomination deadline [for board directors] is appropriate or justified”
Daniel Boone Wayson
Chairman of the Wynn Resorts board of directors