Cambodian casino operator NagaCorp managed to buck the Asian casino trend by growing its VIP gambling business in the first half of 2014. NagaCorp, which operates Phnom Penh’s only casino NagaWorld, reported a 27% revenue rise in the six months ending June 30. NagaCorp revenue topped $191m, while after-tax profits rose 8% to $67.5m. Earnings per share rose 9¢ to $2.96, leading NagaCorp to declare an interim dividend of $2.07 per share.
Unlike casinos in Macau, which have seen VIPs vanish while mass market gaming surges, NagaCorp saw nearly equal gains in VIP (20%) and public floor (22%) table turnover. Revenue from high-rollers was up 61.3% to $86m as win rate improved to 3.6%, a full point above the same period last year. Mass market table revenue rose 19.8% to $53.1m as win fell half a point to 22.6%. Mass market electronic gaming machine (EGM) revenue fell 6.4% to $41.2m as spending rose only 3% while win rate fell 0.8 points to 10.1%.
NagaWorld’s mass market revenue accounted for 49% of H1 revenue, down from 58% the year before. The VIP market rose to 45% from 35% over the same time. However, mass market gaming produced 68% of H1 profits (down from 75%), while 25% of profits came via VIP gaming (up from 19%). Non-gaming revenue accounted for just $10.7m of overall revenue, up from $9.9m a year ago. At the end of H1, NagaWorld had 109 gaming tables and 1,544 EGM in operation but 47 new VIP tables went into action in July on the hotel’s Level 3 block.
NagaCorp credits the March 2013 introduction of its new junket incentive program for continuing to funnel VIPs into the property and has high hopes for the pair of Airbus 320 jets it recently purchased to fly in gamblers from cities in Asia that lack direct flights to Phnom Penh. The jets will be leased to an independently operated airline that will partner with Chinese travel agents to also target mass market gamblers for package tours to NagaWorld.
Looking ahead, the Naga2 casino and retail complex being built alongside NagaWorld remains on target for a 2017 opening. The NagaCity Walk retail portion is expected to open by mid-2015, while the TSCLK Complex that comprises the new hotel and gaming operations won’t be ready for two years after that.
As for NagaCorp’s Primorsky Entertainment Resort City (PERC) project in Vladivostok, Russia, the company has established the necessary subsidiaries in the region and expects to obtain all the necessary permits within about a year. The PERC project isn’t expected to open before 2018.
Meanwhile, Cambodia’s Ministry of Information has ordered local media to stop advertising gambling, be it via print, radio, TV or online. The Phnom Penh Post quoted the August 1 letter scolding media outlets for accepting ads from those seeking to “attract Cambodians to the game by promoting betting on football, horse races and online games.” Many small betting operators have sprung up in the special economic zones that line the country’s borders but the government apparently wants to keep things down to a dull roar. The Ministry says it will take “legal action” against all media outlets that fail to observe the advertising ban.
