NagaCorp GGR up 15pct 1Q, stable outlook despite Covid-19
Cambodian casino operator NagaCorp Ltd says it recorded overall gross gaming revenue (GGR) of US$368.9 million in the first quarter of 2020, an increase of 14.8 percent in year-on-year terms. That was despite a challenging business environment in Asia caused by the Covid-19 pandemic.
NagaCorp said in a filing on Wednesday to the Hong Kong stock exchange that GGR growth was spurred by the VIP market: the firm posted an increase of 18.4 percent in VIP rolling chip turnover to US$9.69 billion, leading to a jump of 24.8 percent in VIP GGR. The latter stood at US$270.2 million for the first three months of 2020.
The casino operator has an exclusive licence to operate casinos in Phnom Penh and its surroundings. It started operations in that city via the company’s NagaWorld property – now referred to as Naga 1 – which opened in December 2006. That venue is now linked – via a small underground shopping mall – to Naga 2, an expansion that opened in November 2017. The overall collection of properties is now known as the NagaWorld Complex (pictured in a file photo).
The Cambodian authorities have ordered all casinos in the country to shut down on a temporary basis with effect from Wednesday night, as part of a number of measures to prevent the spread in Cambodia of the novel coronavirus responsible for the Covid-19 infection.
NagaCorp said that, dispute the Covid-19-related business disruptions, it remained positive about its long-term prospects and with a “stable” outlook. “We believe the lifespan of the Covid-19 [emergency] is shorter than the duration of our monopoly which lasts till 2045,” the firm stated.
It added it remained “hopeful that near-term business volume growth is not substantially affected” in the event that the Covid-19 outbreak in Cambodia became more serious. “If the Cambodian government is able to contain the spread of Covid-19, the company is expected to continue its trajectory of growth in the short term especially now the Covid-19 spread is quite well contained in China.”
China provides the bulk of the kingdom’s tourist arrivals and mainland gamblers are widely viewed by Asia-Pacific casino operators as among their most valuable clients.
NagaCorp stated in the filing it was confident it could meet all its financial obligations in the short- to mid-term, including the retirement of the company’s US$300-million-worth of senior notes, which are to mature in May 2021.
“Despite the Covid-19 fear, the group shall continue the development of Naga 3, and the expected successful completion of Naga 3 by 2025… shall increase the capacity of the group by at least two times.”
Junket biz helps VIP growth
NagaCorp said in its latest filing that the improved performance in its VIP segment during the first quarter of 2020 was “contributed partly by junket operators” with fixed operations in Naga 2 that “brought in VIP players (mainly from China) especially during the times when casinos are closed in Macau, Philippines and Malaysia.”
The firm noted its gaming operations benefited from the fact that Cambodia did not impose travel restrictions on travellers coming from mainland China until March 30. “Moreover, with the relatively low incidence of the Covid-19 [outbreak in Cambodia] especially during the first two and half months of the [first quarter], VIP players felt more comfortable to visit NagaWorld.”
NagaCorp recorded a slight contraction in its mass market table segment during the first quarter, with GGR down by 1.0 percent in year-on-year terms to US$68.0 million.
The firm added that electronic gaming machine gross revenue and net revenue during the period were “down 15 percent due to lower credit in of 25 percent”. NagaCorp did not provide further figures for this segment.
The firm said the GGR increase in the first quarter of 2020 had benefitted from by a number of factors, including a “relatively well managed” response by the local authorities to the Covid-19 crisis. Also contributing to NagaCorp’s results in the first quarter was what the firm said was a “still relatively good mix of customer base”.
It said that despite a decrease in overall volume of visitors, the NagaWorld complex still recorded a “good number” of clients. That included business people from China that might have chosen to stay in Cambodia because of the Covid-19 situation back in China, and clients from the Southeast Asia region, particularly “before the closure of their countries’ borders”.
In its filing, NagaCorp said that as of March 31, it had cash and deposits amounting to about US$473 million. The firm also confirmed it still planned to upgrade a second batch of 250 hotel rooms at Naga 1 by June. The upgrade works for a first batch of 250 rooms were completed at the end of last year.
The statement also offered some details on NagaWorld Complex’s proposed Naga 3 expansion, to be a mix of gaming and non-gaming. NagaCorp confirmed that piling work remained scheduled to begin in the second half of 2020.
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