Brokerage CLSA Ltd says it expects Cambodian casino operator NagaCorp Ltd to achieve a net profit compound annual growth rate (CAGR) of 12 percent from 2025 to 2027, while paying circa 30 percent of profits as dividends.
Along with “improved operating efficiencies,” the casino firm will in likelihood have a “lower finance cost burden” as the scale of its investment for the NagaWorld complex’s Phase 3 is expected to be reduced, the institution said in a Wednesday report, initiating coverage of the casino operator.
“NagaCorp’s earnings are set to rebound in 2025 from a low base, in our view, with organic growth momentum likely continuing into 2027,” wrote CLSA’s analyst Jeffrey Kiang.
“The recent escalation of conflict between Cambodia and Thailand is unlikely to challenge NagaWorld’s operations as long as patrons’ mobility from Malaysia, Singapore and Greater China are not restricted,” the analyst added, referring to the “key” feeder markets for the casino operator.
Hong Kong-listed NagaCorp has a long-life casino monopoly in the Cambodian capital, Phnom Penh, which it exercises via its NagaWorld complex (pictured).
CLSA expects NagaCorp’s net profit to grow from US$298 million in 2025 to US$376 million in 2027, driven by strength in mass and premium gaming businesses, the company’s “cost discipline”, and “lower finance cost commitment ahead”.
The brokerage identified a number of “tailwinds” for NagaCorp through 2027, factors that are expected to support the casino firm’s revenue and improved operating efficiency.
CLSA noted in the report: “We expect growing foreign direct investment and depreciation of the U.S. dollar should drive NagaCorp’s earnings growth.” The gross gaming revenue generated at NagaWorld is denominated in US dollars.
“Cambodia enjoys a competitive reciprocal tariff (imposed by the U.S.) compared with other countries in South and Southeast Asia, which should drive FDI [foreign direct investment] going forward,” the institution added. “Meanwhile, the expected monetary easing cycle in the U.S. should underpin strength of currencies in the region, while CLSA forecasts a modest appreciation of the Malaysian ringgit, Singapore dollar and Chinese renminbi against the U.S. dollar.”
Rising foreign direct investment should continue to drive business travellers from China that are “work expatriates” – a key customer segment for NagaCorp – into Cambodia, CLSA suggested.
The brokerage also said it believes Cambodia’s competitive gaming tax rates versus other gaming jurisdictions across the region could support NagaCorp’s profitability.
Scaling down Naga 3
CLSA also said NagaCorp could see reduced cost burden with “lower interest on liabilities ahead”.
“Nonetheless, we expect dividend payout to be at only approximately 30 percent going forward, as construction of NagaWorld [Phase] 3 with internal funding should be a key priority for the company given its high cost of capital…” the report stated. The dividend payout ratio could be raised after capital expenditure (capex) for Naga 3 project “peaks”, the institution added.
NagaCorp in December announced the termination of a subscription agreement that would have seen the company raise funds for the Naga 3 expansion project.
Following the termination of that agreement, the “downward revision” of Naga 3 capex is “highly likely”, CLSA suggested.
”We think it is reasonable to believe total construction costs for Naga 3 will come down by 50 percent to US$1.75 billion (as our base case), as the company announced termination of a planned share placement in December 2025 that could have raised 50 percent of the initially budgeted capex for Naga 3 of US$3.5 billion,” the brokerage noted.
“We assume the remaining capex to be spent equals approximately US$1 billion, which should be comfortably financed by NagaCorp’s recurring cashflow,” the institution added.
It also noted: “We attribute the capex cut [for Naga 3] to a structural shift in the gaming market towards mass gaming over the long term, primarily due to dissolutions of junkets from Macau (in 2021 and 2022). Currently, only gaming promoters and junkets in Southeast Asia are driving the company’s referral VIP business.”
The payback period for the Naga 3 expansion project could be “four to five years”, using Macau’s “integrated resorts” as benchmarks, the CLSA analyst noted.
Because of the expected cut of Naga 3’s capex, NagaCorp’s cash generation should be strengthened, the analyst said.
“NagaCorp’s free cashflow to equity holders (FCFE) will likely surge from US$152 million in 2024 to US$235 million in 2027, reaching a record high,” he added. “Still, we expect priority on capital allocation (in descending order) over the next three years is constructing Naga 3, repaying shareholder loan (maturing in May 2026) and returning cash to shareholders.”
NagaCorp reported a net profit of US$148.8 million for the first half of 2025, compared with a US$963,000 loss a year earlier. That was on revenue that grew 16.8 percent year-on-year, to about US$341.8 million, according to the firm’s interim report published in August.
