GGRAsia – Donaco net revenue up circa 7pct to US$17mln in 1Q

Donaco net revenue up circa 7pct to US$17mln in 1Q

Apr 26, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck

Donaco International Ltd, an Australia-listed operator of Asian casinos, says its net revenue grew to AUD25.5 million (US$17.2 million) in the first calendar quarter of this year, from AUD23.65 million a year earlier, an increase of about 7.2 percent.

It gave the information in a quarterly trading update to the Australian Securities Exchange published on Friday. The document selectively cited data from the period. Donaco stated its group earnings before interest, tax, depreciation and amortisation (EBITDA) in the first three months of the calendar year fell to AUD10.82 million from AUD11.03 million, a decrease of about 1.9 percent. The firm’s financial year ends on June 30.

“The result was driven by higher group revenues and tighter management of corporate costs,” the company told the ASX.

Donaco runs the Star Vegas Resort and Club in Poipet, Cambodia, which targets players from nearby Thailand – a country that does not have licensed casinos – and the Aristo International Hotel in Vietnam, which mainly caters for players from the neighbouring Chinese mainland, a jurisdiction which likewise does not have licensed casinos.

Donaco’s net revenue in the period from January 1 to March 31 at the Star Vegas business grew to THB439.6 million (US$13.74 million) from THB437.1 million a year earlier, but property-level EBITDA there fell to THB197.6 million from THB264.6 million.

“Higher gross gaming revenue from table games was offset by higher junket commissions and profit-sharing costs, and lower slot-machine revenue,” the update said.

VIP turnover at Star Vegas “increased during the March 2019 quarter to THB20.3 billion, compared to THB18.52 billion in March 2018, driven by the addition of new junket groups as management rebuilt the VIP gaming business,” said the firm.

“Main-hall turnover almost tripled to THB64.6 million over the same period, following the introduction of new mass-market tour groups, primarily from Thailand,” it added.

Calendar first-quarter net revenue at the Aristo International Hotel shrank to US$4.5 million from US$4.6 million a year earlier, but property-level EBITDA there was a steady at US$2.3 million, the same as a year earlier. The update said the result was due to tight control of costs.

“The Aristo business recorded a lower rolling chip turnover of US$294.1 million over the March 2019 quarter, compared to US$368.1 million in the March 2018 quarter, as management continued to rebuild the VIP business,” the filing stated. “Junket commissions were reduced by 40 percent.”

Loss, Joey Lim, share dealings

Last month, Donaco announced it had narrowed its fiscal first-half loss, but blamed its interim AUD36.8-million deficit on an impairment charge related to its casino operations in Cambodia. For the full-year 2017-18, Donaco made a loss after tax of AUD124.5 million.

Donaco is engaged in a dispute with several Thai businessmen that formerly owned the Star Vegas assets in Poipet. Donaco says the trio of Thais is running two competing casinos in violation of a valid agreement. The company has taken the dispute to arbitrators and courts in several jurisdictions.

Friday’s update mentioned what Donaco called a “strategic review process” for its business. The firm said it had planned to complete that in March, but the work had been delayed because of events surrounding a 27.25 percent stake in the company, that had recently changed hands.

In March it emerged that certain shares in Donaco linked to the Lim family – namely about 224 million units of stock – had come into the hands of receivers. Donaco said in a filing that the transfer of the shares might also be regarded as a “change of control” under the terms of a loan agreement with Taiwan’s Mega International Commercial Bank Co Ltd – a lender to Donaco.

In mid-December, Donaco told the ASX it was considering what to do about a US$39.9-million debt to the bank, secured against the assets of Star Vegas.

Joey Lim Keong Yew was the chief executive and managing director of the company until March 19 when his employment was terminated “with immediate effect”. Mr Lim, a scion of the family that founded Malaysia’s casino conglomerate Genting, had been on sick leave since December 6, dealing with “health and personal matters”. During his absence, his brother, non-executive director Ben Lim Keong Hoe, stepped in as acting CEO.

According to the firm’s report for the financial year to June 30, filed in October, Mr Joey Lim and his brother controlled 41.13 percent of Donaco as of that date.