Dreamworld Pailin closure hasn’t soured EGT on expansion opportunities

entertainment-gaming-asia-dreamword-lessonsEntertainment Gaming Asia (EGT) reported revenue up sharply in Q4 as increased casino products sales offset falling gaming operations revenue.

For the three months ending Dec. 31, EGT revenue rose 63% year-on-year to $8.3m, primarily due to $4m in gaming chip and plaque orders from two Philippines casino operators – Melco Crown Entertainment and Bloomberry Resorts. Gaming products revenue was $4.2m in Q4, up from $729k in the same period the previous year.

Gaming operations revenue fell 7% to $4.1m. EGT’s slot machine operations in the Philippines fell 16% to $648k thanks to increased competition from those new Entertainment City Manila casinos to which EGT supplies chips.

Cambodian gaming operations fell 3% to $3.2m. EGT operates the Dreamworld Poipet slots hall on Cambodia’s border with Thailand and supplies slots to NagaWorld, NagaCorp’s flagship casino property in Phnom Penh. The Poipet property saw lower player traffic while NagaWorld enjoyed increased VIP traffic and improved daily net win per unit.

EGT’s Q4 earnings fell by half to $369k while reporting a net loss of $1.5m. The company blamed the red ink on decreased gaming operations plus “production inefficiencies” and “temporary machinery issues” related to the manufacturing of casino plaques.

For 2014 as a whole, revenue was up 4% to $22.4m, with gaming operations down 9% to $16.4m while gaming products nearly doubled to $6m. The year saw EGT shutter its underperforming Dreamworld Pailin casino after two years of fiscal futility. The closure contributed $325k to EGT’s net loss of $2.8m in 2014.

The year also saw Lawrence Ho’s Melco International Development take a controlling interest in EGT. On a call with analysts, EGT CEO Clarence Chung said EGT’s new status as a Melco offshoot allowed the company to “leverage relationships and industry expertise” to access “a broader pool of potential growth opportunities.”

Chung said EGT plans to pursue new gaming projects, including placing slots in casinos and hotels in “certain markets in Indo-China.” Despite the Pailin fiasco, which Chung said had provided “valuable experience,” EGT hasn’t given up on expanding its Dreamworld casino brand. Chung said future Dreamworld projects in Asian markets would focus on “projects that are relatively larger in size.”