NagaWorld GGR soars, profit checked by sales costs
Annual gross gaming revenue (GGR) at NagaWorld, the only casino resort in Cambodia’s capital Phnom Penh, grew by 23 percent year-on-year in calendar year 2014 to US$381.38 million said the venue’s operator NagaCorp Ltd on Wednesday.
“The ability of the group to outperform Macau in top-line growth is attributable to the relatively high proportion of revenue derived from the mass market, and the fact that most [NagaWorld] VIP revenue is derived from Southeast Asia,” stated Hong Kong-listed NagaCorp in its annual results.
Macau market-wide recorded a drop in GGR of 2.6 percent in 2014, according to Macau government data.
“The downturn in Macau offers the group further opportunities to further penetrate the Chinese gaming market in both the VIP and mass gaming segments, by being able to offer attractive commercial terms to junket operators and agents as a result of NagaWorld’s low cost structure,” added the firm.
VIP revenue at the property rose 41.3 percent year-on-year to US$188.18 million, from nearly US$133.18 million in 2013. In the equivalent period in Macau, VIP revenue fell 10.9 percent year-on-year.
NagaWorld’s revenue from mass table games was up 21 percent, to US$108.64 million, from US$89.80 million in 2013.
Nonetheless, NagaCorp said its growth in net profit for 2014 was kept in check by an increase in the cost of sales, which went up by 36.5 percent year-on-year.
The group’s net profit for 2014 – excluding the impact of an entrance fee introduced in 2013 for an electronic gaming area – increased by 9 percent to US$136.09 million.
“The relatively lower net profit growth compared to GGR growth is a result of higher incentives given to junket operators to promote NagaWorld to the rest of Asia (including China) as well as higher staff costs to improve service quality and staff retention,” stated the firm in its annual results.
“The group is of the opinion that these promotional and operational strategies will bear fruit in the coming years as NagaWorld grows its market share in Asia,” added the company.
NagaCorp also said it plans to sign up more Macau based junket operators in the coming months “as they seek to diversify their operations to other parts of Asia”.
The annual report quoted data from Cambodia’s Ministry of Tourism indicating that in the first 11 months of 2014 Cambodia recorded 4 million international visitor arrivals, a 6 percent rise on the equivalent period in 2013. It said visitors from Vietnam (20 percent of the total), China (13 percent) and Laos (10 percent) collectively accounted for 43 percent of total tourist arrivals to Cambodia in the period. Arrivals from China increased by 22 percent year-on-year to 507,860 visitors in the first 11 months of 2014.
NagaCorp said in its results statement that an extension to the Phnom Penh property called NagaCity Walk including a shopping mall “is scheduled for physical completion by the third quarter of 2015 and expected to commence operations in the first quarter of 2016.”
The firm added that its casino hotel project in Vladivostok, Russia, would “commence operation not later than 2018”.
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