GGRAsia – Donaco EBITDA up y-o-y to above US$4mln in June quarter

Donaco EBITDA up y-o-y to above US$4mln in June quarter

Jul 26, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck

Border-casino operator Donaco International Ltd has achieved a 164.17-percent year-on-year increase in its latest quarterly group earnings before interest, taxation, depreciation and amortisation (EBITDA), covering the three months to June 30. Judged quarter-on-quarter, such EBITDA was down.

The latest quarterly EBITDA was AUD6.34 million (US$4.16 million), Donaco said in a Friday filing to the Australian Securities Exchange after trading hours. That compared to AUD2.40 million for the equivalent quarter in 2023, but represented a 24.43-percent sequential decline versus the previous quarter.

Donaco runs the DNA Star Vegas resort (pictured in a file photo) at Poipet, on Cambodia’s border with Thailand, and the Aristo International Hotel at Lao Cai, near Vietnam’s border with China.

For Star Vegas and Aristo, albeit both having a substantial year-on-year increase in the property-level EBITDA, both logged sequential decline in that indicator.

The June-ending quarter – the group’s fiscal fourth-quarter for 2024 – saw Donaco’s net revenue reach AUD10.81 million, down circa 14.6 percent from the previous quarter, though up 57.12 percent year-on-year. About 63 percent of Donaco’s June-quarter net revenue was generated from its DNA Star Vegas property, according to the filing.

In the June quarter, DNA Star Vegas’ net revenue was AUD6.84 million, down 22.45 percent from the March quarter but up 56.52 percent year-on-year. Property-level EBITDA of DNA Star Vegas in the June quarter was AUD4.65 million, down nearly 30 percent from the previous quarter but up 156.91 percent from a year ago.

“Star Vegas recorded stabilised property-level EBITDA and net revenue figures. A higher-than-usual VIP win rate impacted Star Vegas; however, our turnaround strategy minimised operating expenses through a period of stronger visitation,” stated Donaco’s non-executive chairman, Porntat Amatavivadhana, in prepared remarks included in the Friday filing.

The VIP win rate of DNA Star Vegas has been 10.82 percent in the June quarter, compared to just 4.27 percent in the previous quarter and a negative 1.06 percent a year ago. Rolling chip VIP turnover at that property has been AUD7.66 million in the June quarter, compared to AUD12.01 million in the March quarter and AUD19.46 million in the equivalent period in 2023.

Competition potential of Thailand

Donaco flagged in its latest quarterly results update, the potential competitive impact from Thailand if the neighbouring kingdom completes a casino-legalisation process. Such a move has been touted by the Thai government as a way of stemming underground gambling within that country, as well as raising public revenue and boosting economic growth.

Donaco said any such legalisation “may impact Donaco’s Star Vegas operations and cross-border tourism in the region”.

It added: “Donaco is assessing the possible effects this development could have on the business.”

Donaco’s Vietnam operation saw its net revenue reach AUD3.97 million in the June quarter, up by 3.39 percent sequentially and up 58.17 percent from a year ago. Aristo’s property-level EBITDA in the fiscal fourth quarter was AUD2.47 million, down 2.37 percent sequentially but up 88.55 percent year-on-year.

On its Aristo operation, Donaco said it has seen a “minor surge” in its operating expenses, which resulted in a negative impact on its June-quarter property level EBITDA. The operating expenses for Aristo reached AUD1.50 million, up circa 14.6 percent from the AUD1.31 million in the previous quarter.

“We are confident in Aristo’s long-term potential, in light of the opening of the new Sapa airport in 2025,” Donaco remarked, referring to a facility near its Aristo property.

Donaco noted Aristo was subject to an ongoing “tax audit of unredeemed” gaming chips – the chips that patrons deposited at the property – that Vietam’s tax authority has declared should count as revenue for the group.

“This could amount to a potential tax payment of approximately US$5.9 million. Donaco has engaged a consultant in Vietnam to lodge the appeal, and the result is uncertain at the moment,” the group mentioned.

Donaco ended the June quarter with a cash position of AUD29.30 million, up slightly from the March quarter’s AUD28.99 million.