Donaco International Ltd, the operator of a casino hotel in Vietnam’s northern province of Lao Cai, said total revenue from gaming operations increased by 33 percent year-on-year to AUD19.5 million (US$18.1 million) in the 2014 financial year.
Company revenue increased by 80 percent to AUD28.2 million in the financial year ended June 30, 2014. The growth however was offset by a 101-percent increase in operating expenses, which reached AUD11.5 million, the company told the Australian Securities Exchange on Monday.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) went up by 29 percent to AUD8.9 million.
Net profit for the period declined slightly by 3 percent to AUD6.8 million. The company said that excluding non-recurring items, net profit was up 52 percent to AUD7.93 million.
The results reflect the final year of operations of the old Lao Cai International Hotel, the company’s boutique hotel with eight gaming tables. The performance of the property in the preceding year is not a like-for-like comparison however, because the new Aristo International Hotel (pictured) opened on May 18 as a five-star property with 428 rooms and 40 gaming tables.
The fiscal year results only include six weeks of operation of Aristo, said Donaco. The property, located close to the border with China’s Yunnan province, ran during that time “in soft opening mode, with not all facilities available,” the firm added.
Nonetheless, gross gaming revenue for the fiscal year was up by 44 percent year-on-year to AUD55.3 million, the casino operator said.
VIP gaming turnover grew by 67 percent, pushing junket commissions up by 68 percent, Donaco said. Marketing costs, including junket commissions, totalled AUD29.5 million.
The company said it has signed up new junket operators that have already visited with players from the mainland Chinese city of Shanghai, and from Malaysia.
Mass-market turnover dropped 8 percent, “due to occasional adverse weather events during the year,” the firm added.
Joey Lim Keong Yew, Donaco’s chief executive, said the company has seen “strong increase in visitation to the gaming floor, and in turnover from VIP players” since the opening of Aristo.
Donaco said it is confident in the “strong growth potential” of the business and that it expects higher earnings from its gaming operations.
The company completed two capital raisings in the 2014 financial year, with part of the cash – about AUD75 million – set aside for possible acquisitions.
Mr Lim said the company has a “strong pipeline of potential deals in place”. Donaco is focused on the Southeast Asia market, but says it does not rule out investing in other regions.
“All of these opportunities play to our strengths in leisure and gaming operations, particularly in boutique properties in Asia,” Mr Lim added.
There have been reports that Vietnam’s Ministry of Finance has completed a draft decree that could allow economically qualified Vietnamese nationals aged over 21 to gamble in domestic casinos. Currently only holders of foreign passports can gamble in the country’s casinos.
“Timing and detail of potential changes is uncertain, but would benefit Aristo by allowing development of local mass market,” the company said in Monday’s filing.
Donaco also confirmed the spin-off of its mobile technology unit, iSentric Sdn Bhd, which is expected to be completed in mid-September.
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"I am not going to speculate on what the [casino licence refreshment] tender requirements would be. I have full confidence and faith in the Macau government to treat everyone fairly"
Wilfred Wong Ying Wai
President and chief operating officer of Macau-based casino operator Sands China