NagaCorp Ltd, operator of NagaWorld, a casino resort monopoly in the Cambodian capital Phnom Penh, reported a net profit of US$83.0 million for the first half of 2023, up 57.4 percent from a year ago.
For the three months to June 30, net profit reached US$52.8 million, an increase of 75.1 percent quarter-on-quarter, the firm said in a filing on Wednesday to the Hong Kong Stock Exchange.
The group’s first-half earnings before interest, taxation, depreciation and amortisation (EBITDA) were US$143.2 million, 10.1-percent higher than in the prior-year period. Second-quarter EBITDA stood at US$82.6 million, up 36.3 percent sequentially.
Group-wide revenue for the six months to June 30 rose by 9.8 percent year-on-year, to just above US$263.0 million.
Gross gaming revenue (GGR) from casino operations amounted to US$252.3 million, a 7.9-percent increase from the first half of 2022. Second-quarter GGR grew by 14.7 percent sequentially, to US$134.8 million.
The firm has a long-life monopoly casino licence for Phnom Penh, via its NagaWorld resort complex (pictured). It stated that its first-half performance benefitted from a “gradual recovery of visitation from neighbouring countries and strong focus on the captive domestic market”.
“The group continued stringent cost control measures and operational efficiency initiatives, resulting in a higher profit margin,” it added.
NagaCorp said its board did not recommend the payment of an interim dividend. In 2022, the company paid an interim dividend, as well as a full-year dividend by way of scrip shares.
The firm stated that the mass-market and premium VIP market segments had a gross profit margin of 83 percent – net of gaming tax –, accounting for 90 percent of the group’s GGR and 93 percent of its total gross profit for the reporting period.
Mass-market table revenue was US$98.0 million in the six months to June 30, down 5.1 percent from a year earlier. Revenue from electronic table game operations rose 7.1 percent year-on-year, to US$64.9 million.
The casino developer said it “observed a continuing increase” in mass-market business, including table games and electronic gaming machines. Such increase, it said, was due to a number of factors, including “to some extent the recovery of Chinese visitors patronising NagaWorld”.
First-half 2023 premium VIP market GGR increased by 19.5 percent year-on-year, to US$62.9 million. NagaCorp mentioned the “successful conversion” of some previous referral VIP players into direct premium VIP players as a reason behind the segment’s boost.
In what the company terms referral VIP, revenue was US$26.5 million, up 53.5 percent from first-half 2022, due to an increasing number of patrons from “neighbouring Southeast Asia countries”.
NagaCorp said it had total cash and bank balances of US$261.3 million as of June 30, compared to US$175.2 million as of the end of 2022.
The firm’s net debt stood at about US$208.6 million as of June-end. “The company is confident that it can discharge all of its financial obligations when the outstanding senior notes mature in July 2024,” it stated.
In June, Moody’s Investors Service downgraded to ‘B3’ from ‘B2’ the corporate family rating of NagaCorp. “The rating downgrade and negative outlook reflect NagaCorp’s lack of refinancing progress for its US$472 million U.S. dollar bond coming due in July 2024,” said at the time the ratings agency.
NagaCorp confirmed in Wednesday’s filing that construction of Naga 3, an addition to the NagaWorld gaming complex, has been pushed back by four years, as the firm is “considering options” regarding completion of the project. Such options include the possibility of resizing the Naga 3 project.
