Ent Gaming Asia 4Q loss widens, firm mulls new project

Mar 11, 2016 Newsdesk Industry Talk, Latest News, Rest of Asia, Top of the deck  

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Nasdaq-listed gaming supplier Entertainment Gaming Asia Inc reported a net loss of US$2.7 million in the fourth quarter of 2015, compared with a loss of US$1.5 million for the prior-year period.

The firm said in a Thursday filing the loss included US$2.6 million in non-cash impairments in connection with the company’s annual valuation review. Impairments included the write-down of building infrastructure and related gaming assets for the firm’s stand-alone slot hall Dreamworld Poipet (pictured) in Cambodia, “as the carrying values of these assets were higher than the expected value of the projected future cash flows”.

Casino investor Melco International Development Ltd – a company controlled by Lawrence Ho Yau Lung – holds approximately 65 percent of Entertainment Gaming Asia. Melco International is one of the two controlling shareholders of Asian casino developer Melco Crown Entertainment Ltd.

Entertainment Gaming Asia stated consolidated revenue for the three months ended December 31 of US$7.3 million, down by 12.1 percent in year-on-year terms. The decrease was due to a decline of almost 39 percent in revenue from sales of gaming products, to US$2.6 million. This drop was partially offset by a 15.2 percent increase in gaming operations revenue, due to performance improvements in the firm’s slot participation ventures in the NagaWorld and Thansur Bokor casinos, both in Cambodia.

Entertainment Gaming Asia also has gaming operations in the Philippines.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) was US$2.1 million compared to US$370,000 in the fourth quarter of 2014.

Entertainment Gaming Asia stated it had zero outstanding debt at the end of last year.

New project

“While we ended 2015 on a strong note, we face certain challenges ahead,” Clarence Chung Yuk Man, chairman and chief executive of Entertainment Gaming Asia, stated in a conference call with investment analysts following the firm’s results announcement.

Concerns mentioned by Mr Chung included “a reduced order pipeline for the gaming products divisions for 2016, due to fewer new casino openings and the overall climate in the casino industries in our market.”

He added: “Despite the challenges, with approximately US$31 million in cash… we believe we are in a good position to explore and execute on new growth opportunities.”

Mr Chung stated that Entertainment Gaming Asia was currently working on a new project, “which if successful, could potentially have contributions to revenues in 2016.” He did not provide much detail on the new project, only adding that it would be fully funded by current cash resources. More details could be made available over the next three months, Mr Chung added.

Last week, Entertainment Gaming Asia said it was to continue leasing 670 slot machines and related equipment to NagaWorld. The new agreement came into effect on March 1.

A Wednesday note from Union Gaming Securities Asia Ltd stated that, under the previous deal, Entertainment Gaming Asia received “north of US$47 per game per day”. Under the new agreement, NagaWorld “will be paying Entertainment Gaming Asia US$22 (declining to US$18 over time) per game per day,” analyst Grant Govertsen said.

According to Union Gaming, Entertainment Gaming Asia is the “largest outsourced third-party slot operator at NagaWorld,” a property owned and managed by Hong Kong-listed NagaCorp Ltd.

Entertainment Gaming Asia reported consolidated revenue of US$31.5 million for the full year of 2015, an increase of 40.9 percent in year-on-year terms, due to improved performance in both the gaming operations and gaming products business divisions. Entertainment Gaming Asia reported net income of US$820,000 for the 12 months ended December 31, compared to a net loss of US$2.8 million in 2014.

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