NagaCorp Ltd’s “defensive” approach to high-roller gambling business at its NagaWorld casino complex (pictured) in the Cambodian capital Phnom Penh is likely to help it achieve 30-percent growth in VIP revenue this year, compared to likely “mid-teen” percentage decline in the Macau market.
That is according to a note from CGS-CIMB Research Pte Ltd.
The regional VIP gambling segment has been roiled recently by allegations in China’s state-backed media of “online gambling” facilitated outside Macau by the Suncity junket brand. The claims have been denied by Suncity.
A senior NagaCorp executive had said at a company event in Hong Kong in July that the firm did not have “any material exposure” to proxy betting in its Cambodia operations. The Suncity brand has had a presence at NagaWorld.
The memo from CGS-CIMB analyst Michael Ting said that due to Cambodia experiencing “increased business-related travel from China” and “reduced scrutiny on capital control measures versus Macau,” and Hong Kong-listed NagaCorp being able to offer “higher junket commissions,” the brokerage expected “NagaCorp’s VIP segment to continue to outperform Macau”.
According to investment analysts, NagaCorp can offer junket operators higher commissions than casino operators in Macau because its Cambodian operations are not currently subject to a direct tax on gross gaming revenue (GGR). Macau’s 39-percent effective tax on GGR is understood to be the highest in the Asia-Pacific region.
“NagaCorp’s VIP revenue base is more defensive and diversified with only circa 50 percent of volume from Greater China,” Mr Ting added.
Referring to the Suncity junket brand, he stated: “Suncity’s current Sihanoukville [in Cambodia] and future Hoiana gaming operations [in Vietnam] will not feature proxy betting; this should benefit Naga, due to a smaller degree of regional competition.”
He added: “We believe proxy betting could have diverted significant funds from NagaCorp’s operations in Cambodia into Suncity’s own operations. To a lesser extent, the crackdown on Sihanoukville’s online gaming operations and building construction should slow the pace of gaming growth there, which also benefits NagaCorp in terms of lower competition.”
In early August it emerged Macau’s casino regulator had banned the city’s junket operators from using Macau as a base for cross-border settlement of VIP gambling services provided elsewhere.
A number of commentators said at the time that such action would have the affect of curtailing so-called proxy betting, a practice already banned in Macau.
Proxy betting can offer players a casino gambling experience without actually being present in a bricks and mortar establishment, thanks to use of “proxies” – people that are actually on site – placing bets on their behalf via telephone or online communication.
In a press conference in early July, the boss of the Suncity brand, Alvin Chau Cheok Wa, had said in a prepared statement that even if certain “products” were “legally allowed to operate in other countries and regions, the company will not adopt them if the laws of Macau do not allow it”.
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Oct 15, 2021
Oct 15, 2021
"The Macau recovery continues to be disrupted by false starts, while the lack of [Chinese] public holidays for rest of the year should cap the pace of the rebound”
Andrew Lee and David Katz
Analysts at brokerage Jefferies LLC