Fresh Russia project delays for NagaCorp: chairman

Nov 22, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck  

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The much-anticipated Russian Far East project from Asian casino developer NagaCorp Ltd has faced some further delays due to a change of construction contractor, said the group’s chairman Tim McNally (pictured) in an interview with GGRAsia.

The current estimate for “completion” was “towards the end of 2020”, he told us. “We had to transition to another construction company, so that delayed things,” he stated.

“If you see how far along the structure has gone in the last six to eight months, that may relieve any scepticism,” said the chairman, referring to market opinion about the scheme.

“We are 11 or 12 storeys up now,” he stated, adding “It’s a very challenging environment at times to work in”.

He further noted: “Now winter sets in, so there’s always a slowdown period, but we will pick back up and be full speed ahead come springtime.”

No up-to-date site photographs to illustrate the progress of the scheme were available at the time this story went online.

The firm’s development agreement with the authorities in Primorksy Krai – a Russian federal territory of which Vladivostok is the capital – was signed in 2013, where it committed to spend at least US$350 million, according to previous commentary to GGRAsia from the firm. The group is currently also committed to spending approximately US$3.5 billion on Naga 3 – an extension to its NagaWorld flagship complex –in its core monopoly market, Phnom Penh, the capital of Cambodia.

Since 2013 there has been a number of tentative deadlines for completion of the Russian scheme that have been set and then revised.

In July 2017, NagaCorp said it had some delays on that site – part of the Primorye Integrated Entertainment Zone (IEZ) that is due to have a cluster of casino resorts – due to an “archaeological dig after some artefacts were found” on its land.

At that time the group had mentioned the possibility of an operational launch “in the first half of 2019”.

In April 2018, the Primorye authorities said pile cap work had begun on NagaCorp’s site there.

During the Global Gaming Expo (G2E) Asia 2019 casino trade show and conference held in Macau in May, Mr McNally had told GGRAsia the Russian scheme near Vladivostok might open in “approximately the second quarter next year”.

Longer Cambodia exclusivity, Russia competition

On Tuesday this week – after GGRAsia spoke to Mr McNally – NagaCorp announced that it had negotiated a 10-year extension on the exclusivity period for its Phnom Penh gaming licence. That monopoly will now run until December 31, 2045, and the overall Cambodia licence until 2065.

In Russia, NagaCorp would not have the benefit of monopoly. The only casino currently operating in the Primorye IEZ is Tigre de Cristal, although several other venues from other investors are slated to be added to the zone.

Since April Suncity Group Holdings Ltd, a Hong Kong-listed firm controlled by Macau casino junket investor Alvin Chau Cheok Wa, has had a leading stake in Summit Ascent Holdings Ltd, the promoter of Tigre de Cristal. That resort was originally developed by interests including Asian casino entrepreneur Lawrence Ho Yau Lung. He sold off his remaining interest in Summit Ascent and stepped down as its chairman in December 2017.

In late August Summit Ascent told the Hong Kong Stock Exchange its first-half revenue and profit had jumped year-on-year driven by factors including “a strong rebound on our VIP business” at Tigre de Cristal. That group added it expected to benefit from cooperation with Suncity Group Holdings.

GGRAsia asked NagaCorp’s Mr McNally whether the group was concerned about the level of competition it might face – particularly for VIP business at Primorye – now that the Suncity brand was a casino investor there in its own right, rather than just a partner for other operators.

He told us, referring to the presence of the Suncity brand at NagaWorld in Cambodia: “We already have an existing relationship with Suncity. I don’t anticipate or have any reason to believe that we will not continue.”

Privately-held junket operator Suncity Group runs VIP operations at NagaWorld under the Suncity brand. The firm is an entity separate from Suncity Group Holdings, but the two companies are headed by Mr Chau.

Mr McNally added, referring to his firm’s Russia scheme: “I think the whole area will benefit when we open. It creates a more attractive destination, it creates more energy, and more choices for the visitors there. I don’t view their [Suncity’s] interests [in Tigre de Cristal] as a liability [for us].”

The chairman further noted: “In one sense you are a competitor, but in other ways you are also a colleague-operator, where both are trying to accomplish the same thing: create an attractive destination; offer a quality product; offer entertainment and the kind of services that will make us competitive with other areas and other regions.”

NagaCorp would have its particular strategies that would “focus heavily on the development of tourism,” he outlined.

“We’ll have junket partners – whomsoever they may be… So what Suncity does as a management group or in terms of equity interest – that is their business, not our business,” Mr McNally noted.

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