Entertainment Gaming Asia Inc reported a profit of US$1.5 million in the second quarter of 2015, compared to a loss of US$22,000 in the year-earlier period.
The Nasdaq-listed company said in a filing on Thursday that the results were driven by improvements both in its gaming operations and gaming products business divisions.
The second quarter 2014 results included a net loss of US$239,000 from discontinued operations related to Dreamworld Pailin. The firm sold the Cambodian gaming property in June 2014.
Entertainment Gaming Asia is engaged in the leasing of electronic gaming machines on a revenue sharing basis to the gaming industry in Cambodia and the Philippines, and the development and operation of gaming venues in Asia under its ‘Dreamworld’ brand. It also manufactures and sells gaming chips and plaques under the ‘Dolphin’ brand (pictured).
The firm is a subsidiary of Hong Kong-listed Melco International Development Ltd, chaired by Lawrence Ho Yau Lung. Melco International is one of the two controlling shareholders of Melco Crown Entertainment Ltd, which has casino operations in Macau and the Philippines.
Entertainment Gaming Asia reported consolidated revenues of US$7.6 million for the three months ended June 30, up by 54.5 percent in year- on-year terms.
Gaming operations revenue was US$4.9 million for the second quarter of 2015, a year-on-year increase of 11.2 percent “due to improvement in the Cambodia operations partially offset by a decline in the Philippines operations”, Entertainment Gaming Asia said.
In Cambodia, the firm operates a slot machine hall called Dreamworld Poipet, at Poipet, near the border with Thailand. It also supplies electronic gaming machines on a revenue sharing basis to casino resort NagaWorld in Cambodia’s capital Phnom Penh and to Thansur Bokor Highland Resort, a casino resort in a tourist area of Cambodia’s Kampot province.
Entertainment Gaming Asia said average daily net win per slot unit in the Philippines – where the firm’s operations comprise three venues in the Greater Manila area – was down 14 percent in year-on-year terms to US$65. That was “primarily due to increased competition from new integrated casino resorts” in Manila’s Entertainment City area, which already features two properties in operation: Solaire Resort and Casino and City of Dreams Manila. Two more casino resorts are currently under construction.
“While Philippines average daily net win per unit declined on a year-over-year basis, it has remained relatively stable in recent quarters as the company continues its proactive marketing strategies in efforts to stabilise performance in the increasingly competitive landscape,” Entertainment Gaming Asia stated.
Pursuing new projects
Revenue from gaming products was US$2.7 million for the second quarter of 2015 compared to US$524,000 in the second quarter of 2014. “The increase was primarily a result of higher sales of gaming chips and plaques due to strong reorder levels from existing customers,” the firm said.
In April, it was announced that a new Russian casino project linked to Mr Ho and in which Melco International is a minority investor, was to buy US$1.29-million worth of casino currency from Electronic Gaming Asia.
Melco Crown has a supplier deal with Entertainment Gaming Asia for casino currency, for a term of three years commencing January 1, 2015. The annual caps for each of the three financial years ending December 31, 2017 are US$18 million, US$6 million and US$5 million, respectively.
“For gaming products, we continue efforts to expand our market presence and build on our present confirmed order pipeline of US$4.5 million for the second half of 2015,” Clarence Chung Yuk Man, chairman and chief executive of Entertainment Gaming Asia, said in a statement.
He added: “We are actively pursuing new projects that would drive long-term growth for the company. With over US$24.0 million in net cash and the benefits of being an indirect, majority-owned subsidiary of Melco International, we believe we have greatly improved our ability to secure new projects that could enhance our existing operations and provide the opportunity to expand into new businesses and markets.”
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia