Asian casino operator Donaco International Ltd. posted a net loss in fiscal 2015 after its new Vietnam casino had a “difficult first year.”
The Australian-listed Donaco said revenue from continuing operations in the 12 months ending June 30 fell 12% to AUD 17m (US $12.2m), while earnings fell 41% to AUD 6.4m. Donaco posted a AUD 2.9m loss for the year versus an AUD 6.8m profit in FY14.
Donaco’s year was undone by costs following the May 2014 opening of its new Aristo International Hotel in Vietnam’s Lao Cai province on the border with China. Unforeseen events also played a role, as China issued a travel warning in December and an earthquake hit China’s Yunnan province, which is Aristo’s target market.
The Aristo also suffered from an average VIP win rate of just 1.93%, well below the theoretical range of 2.7% to 3%. Donaco says the Aristo currently lacks sufficient volume in its main floor gaming business to offset the effects of VIPs getting luckier than usual, but the company is working to address this imbalance and recent trading suggests these efforts have had “a positive effect.”
Donaco says visitor numbers have significantly improved in recent months, with hotel occupancy hitting a record high of 80% in July. The VIP win rate has since improved to around 2.5% in June and July, boosting net gaming revenue by one-third.
Donaco’s FY 15 report doesn’t include contributions from Star Vegas in Poipet, Cambodia, the acquisition of which wasn’t finalized until July 1. Donaco recently inked a new junket deal with Heng Sheng Group that the company expects will further boost Star Vegas’ already impressive earning potential.
With Aristo back on its feet and Star Vegas officially anteing up, Donaco expects great things from FY16. The company pulled off something of a coup this month by convincing English Premier League footballers Manchester United to sign their first official Asian brick-and-mortar casino partnership. Plans are still being finalized, but a “legendary” Man U player will visit both Donaco properties “soon” to formally launch the pact.