Hong Kong-listed casino operator and developer NagaCorp Ltd posted a 19.6 percent year-on-year increase in net profit to US$180.1 million for the six months to June 30. The growth was fuelled by an 84.6-percent jump in gross gaming revenue (GGR) – to nearly US$713.9 million – at its NagaWorld Complex (pictured), the firm said in a filing on Tuesday.
The group declared an interim dividend of US$0.0249 per share for the period, to be paid on September 10.
The Hong Kong-listed company has an exclusive licence to operate casinos in Cambodia’s capital Phnom Penh, and its surroundings. It started operations with the NagaWorld property, now referred to as Naga1, which opened in December 2006.
That property now links to Naga2, an expansion that opened in November last year. The latter “significantly increased the appeal, capacity, quality, range and reach of VIP, mass gaming and non-gaming offerings” of NagaCorp in Cambodia, the firm stated in Tuesday’s filing.
The casino operator said that only “minimal cannibalisation” had been so far observed between Naga1 and Naga2, “with Naga1 property retaining most of its existing players while Naga2 is attracting customers who are new to NagaWorld”.
“Naga2 is transformative and has provided the group with a competitive integrated casino resort product comparable to integrated resorts in other established gaming destinations in Asia,” NagaCorp said.
Naga1 and Naga2 combined are now described as the NagaWorld Complex, and are connected via an underground shopping mall known as NagaCity Walk.
NagaCorp is now upgrading the facilities at Naga1, the firm stated in its filing, adding that works were expected to be completed in 2019. In May, brokerage Morgan Stanley Asia Ltd said about half of a US$290-million bond issuance completed in mid-May by NagaCorp would be used to refurbish Naga1.
VIP roll spike
NagaCorp reported VIP gambling rolling chip volume of approximately US$16.84 billion for the first half of 2018, up by 116.8 percent from the prior-year period. The win rate for the period stood at 3.3 percent, it added. This translated into a 162.6 percent year-on-year increase in VIP revenue to US$552.8 million during the period.
The increase in VIP business volume “was due to an increase of business at both properties, in particular in Naga2 where there has been customer demand for higher table limits and hence, increased rollings,” stated NagaCorp.
The firm noted that – in addition to a “few other Macau-based junket operators” that were already operating at NagaWorld – Suncity Group began operations at the complex on March 1, with “a fixed base business operation with full-fledged office facilities”, That, stated NagaCorp, “contributed to increased number of players” and rolling chip turnover. Suncity Group is said by investment analysts to be one of the largest VIP gambling organisers in Macau.
NagaWorld also achieved strong growth in the mass market segment: revenue from main floor tables increased 35.8 percent year-on-year to US$101.1 million.
“The business volume growth is attributable to the increasing visitation at both Naga1 and Naga2 as a result of the tourism growth into Cambodia, particularly from China which recorded 79 percent growth in the first four months of 2018,” NagaCorp said.
Non-gaming revenue at NagaWorld increased by 29.1 percent year-on-year to US$19.1 million in the first six months of 2018, “primarily contributed by [a] 69-percent increase in room nights sold with the opening of Naga2, as well as better performance across all the food and beverage outlets in line with the overall increase in visitation to the combined NagaWorld Complex,” said the casino operator.
NagaCorp is developing a casino resort in Primorksy Krai, near the eastern Russian city of Vladivostok. The project – with a first phase of development that will include a 279-room hotel, casino and a conference hall – “remains broadly on schedule for completion in 2019,” the firm stated in its Tuesday filing.
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Analyst at Roth Capital Partners