Brokerage Morgan Stanley Asia Ltd says it is “likely” that casino developer and operator NagaCorp Ltd will have to refinance its 2024 bonds, given the expected pace of recovery in Cambodia’s gaming market.
Hong Kong-listed NagaCorp has a long-life monopoly casino licence for the Cambodian capital, Phnom Penh, where it operates its NagaWorld resort complex.
The casino firm reported earlier this month earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$245.4 million for full-year 2022, compared to US$15.6 million in the previous year. NagaCorp’s gross gaming revenue grew by 99.5 percent year-on-year, to US$445.9 million.
In a recent note, Morgan Stanley analysts Gareth Leung and Praveen Choudhary suggested nonetheless that fourth-quarter recovery for NagaCorp “was muted,” and that the December “run rate could have been much stronger”.
While the expected return of Chinese package tours in the second quarter of 2023 might “help” NagaCorp’s business recovery, the brokerage said refinancing of the firm’s 2024 bonds “seems likely” given the institution’s “base-case recovery pace”.
Morgan Stanley said it estimated NagaCorp’s net revenues for 2023 at circa US$884 million, with EBITDA reaching US$400 million.
In November, NagaCorp launched a tender offer and repurchased about US$69.5-million of principal amount of the group’s senior notes, due to mature in July 2024. The company said at the time that the tender enabled the group “to manage its overall funding level” and “reduce its gross debt and interest cost”.
The casino firm said it managed to bring down the outstanding principal amount of the 2024 notes to about US$472.2 million.
In its 2022 earnings report published this month, NagaCorp’s management said it “has already looked into various ways to redeem the 2024 senior notes upon maturity”.
It added: “Repaying the 2024 senior notes using internal generated operating cashflow remains as our top priority.”
