Donaco International Ltd, an Australia-listed operator of casinos in Indochina, says it had a “poor overall result” in the three months to December 30, 2019, due to weaker gaming business in December at the firm’s casinos in Poipet, Cambodia; and Lao Cai in Vietnam.
Donaco’s flagship venue, Star Vegas Resort and Club (pictured in a file photo), is near Cambodia’s border with Thailand, a country where casino gambling is illegal. The Aristo International Hotel and associated casino are near Vietnam’s border with China. Macau is the only place in China where casino business is legal.
Donaco’s group-wide earnings before interest, taxation, depreciation and amortisation (EBITDA) for the December-quarter were AUD3.09 million (US$2.07 million), a 64.6 percent decrease when compared to the AUD8.72 million in group EBITDA a year ago, according to Donaco’s filing.
The company’s net revenue for the December-quarter was AUD16.73 million, down by 26.1 percent from AUD22.65 million in the same quarter in 2018. The company’s corporate costs for the period were AUD1.97 million, up by 3 percent year-on-year.
Donaco stated that the December-quarter results contained non-recurring items, including legal costs related to the group’s ongoing and multifaceted dispute with the Thai vendor of the Star Vegas casino resort complex.
Donaco said its Star Vegas property saw softening of its gaming business in the months of October and December, resulting overall in “much weaker” quarterly numbers. Star Vegas’ net revenue generated for the December quarter was THB282.38 million (US$9.07 million), down nearly 33 percent from the THB421.28 million achieved in the same period in 2018. Star Vegas’ property EBITDA in the December quarter was THB97.31 million, down by nearly 50 percent from THB194.60 million in the equivalent period in 2018.
“The Star Vegas business is feeling the impact of increased competition in the Poipet area, particularly from the new Galaxy casino, which opened in May 2019,” said the firm. The latter venue has no connection to Macau casino operator Galaxy Entertainment Group Ltd.
Donaco further noted regarding its own Poipet business: “Illegal casinos in Bangkok were active in December, causing a decline in visitation to the whole Poipet strip in that month.” It was referring to alleged unlicensed gaming activity in the Thai capital.
Donaco said its operating expenses at Star Vegas in the reporting quarter – which reached THB185.07 million – had been as “tightly controlled” as was feasible. The increase was due to “higher legal costs caused by the dispute with the Thai vendor”.
Aristo International in Vietnam saw its December-quarter net revenue decrease by 37.7 percent compared to a year earlier, amounting to USD2.15 million. The venue’s property EBITDA in the reporting quarter also declined – by 82.4 percent from a year ago – to US$300,000. Donaco attributed what it said was a US$1.1-million decline in that resort’s EBITDA during December to a “remarkable run of losses to big VIP players”.
Donaco stated nonetheless that gaming business at both venues had “improved” during January. It added the group’s management – which is again in a period of transition after a boardroom battle and resignations – would continue to work on improving the operations at the properties.
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”We have maintained stringent cost controls, conservative financial policies, and have the resources to weather a lengthy adverse situation if necessary”
Executive director of Hong Kong-listed Summit Ascent, promoter of the Tigre de Cristal casino resort in Russia