Donaco’s earnings hit by high roller luck

May 19, 2016 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Southeast Asia casino operator Donaco International Ltd on Wednesday reported that its “normalised” earnings before interest, taxation, depreciation and amortisation (EBITDA) are on track to reach between AUD90 million (US$64.8 million) and AUD95 million in the fiscal year to June 30, 2016.

Donaco concluded in July 2015 the acquisition of Star Vegas, located in Poipet, Cambodia, for a consideration of US$360 million. The company also owns and operates Aristo International Hotel (pictured), a casino hotel property in northern Vietnam, near that country’s border with China.

The casino operator however said that its actual EBITDA for the 10 months to the end of April was currently “US$7.3 million below the 10-month normalised results”. It said such difference was due to below-theoretical win rates at the Aristo property.

For the 10 months ended April 30, the premium tables at the Aristo have recorded a win rate of 1.62 percent – bellow the casino industry theoretical win rate of 2.85 percent – “primarily due to some significant player wins” in the first quarter of 2016, said Donaco.

“Overall, Donaco International is performing in line with analysts’ expectations at group level on [a] normalised basis, driven by strong performance from both the Star Vegas Resort and Club and Aristo International hotel assets,” the company said in a filing to the Australian Securities Exchange.

Business has been performing better in Cambodia. VIP rolling chip turnover at the Star Vegas increased by 8 percent year-on-year in the three months to March 31, based on constant currency – Thai baht – terms, said the company. Gaming tables at Star Vegas recorded a win rate of 2.91 percent for the 10-month period to end April, up on the 2.81 percent win rate recorded in prior-year period.

In February, Donaco reported casino operating revenue of AUD68.8 million for the six months to December 31, compared to AUD8.6 million in the prior-year period.

In Wednesday’s filing, Donaco confirmed it is planning to expand the Star Vegas casino gaming premises into the adjacent 240-room Star Paradise Hotel.

“There is significant demand from new Thai junkets [that] cannot be accommodated in the existing property due to [that venue's] long-standing arrangements with existing junket operators,” the casino firm said.

The new gaming hall at Star Paradise – being developed by Donaco’s Thai partner – is expected to be completed after June, the company added.

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