GGRAsia – NagaWorld add-on Naga 3 cost, scale likely cut says mgmt

NagaWorld add-on Naga 3 cost, scale likely cut says mgmt

Feb 20, 2024 Newsdesk Latest News, Rest of Asia, Top of the deck

Asian casino developer and operator NagaCorp Ltd is looking to reduce the scale and budget of its Naga 3 extension project at the NagaWorld casino complex in the Cambodian capital Phnom Penh.

“Our thinking is that instead of spending the [US$]700 million” on the podium of that project, “we could be spending substantially less than that,” said Philip Lee Wai Tuck (pictured, second right), the Hong Kong-listed firm’s executive deputy chairman and executive director, in comments to the media during a Tuesday briefing in that city. He added there should be more clarity on the budget in coming months.

NagaCorp did not propose a final dividend for 2023, as the company’s priority currently is to repay the bonds due in July this year, Mr Lee also told the briefing.

“As to whether we are able to pay dividends in the second half of this year or even 2025, that very much ties up to the plan for Naga 3,” Mr Lee said.

“The whole idea is to minimise the capex [capital expenditure] for Naga 3, so that there is surplus cash flow, possibly for the payment of dividends”, the NagaCorp executive added.

In Tuesday trading, NagaCorp’s stock rose almost 7 percent on the Hong Kong bourse, closing at HKD3.22 (nearly US$0.412).

His comments followed NagaCorp’s 2023 annual results filed on Monday evening. In previous corporate releases, the firm had described Naga 3 as a US$3.5-billion scheme.

Naga 3 is designed to connect with the existing two phases of NagaWorld, which has a long-life casino monopoly licence for the Cambodian capital.

But the average hotel occupancy of the existing casino resort complex is currently tracking at just circa 40 percent, according to Mr Lee. How to make the Naga 3 “more efficient” – potentially via fewer hotel rooms – was a focus for the company, the NagaCorp executive noted.

He stated: “If you look at Naga 3, this comprises 16 stories of podium, plus three tower blocks.” The towers had been conceived as “primarily hotel rooms and a VIP gaming area; the podium was originally supposed to be entertainment, F&B [food and beverage], retail, and some gaming area,” added Mr Lee.

“The focus right now we are thinking of developing the podium level, meaning… entertainment, the retail and hospitality segments with some gaming area for the mass market especially,” the executive stated.

In June last year, NagaCorp said it was delaying completion of Naga 3 by four years, to 2029. In the subsequent month, management had mentioned it was to have three hotel towers: two under international luxury brands, and one under NagaCorp’s own branding.

In its 2022 annual report, it had stated that once Naga 3 was completed, the NagaWorld complex as a whole would offer 5,000 hotel rooms.

Chen Yiy Fon had been redesignated in December last year as the new chief executive of NagaCorp – from his prior role as CEO-operations – following the death that month of his father Chen Lip Keong, the firm’s founder.