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Entertainment Gaming Asia hatching secret plan to mitigate challenging 2016

TAGs: Cambodia, Entertainment Gaming Asia

entertainment-gaming-asia-mystery-projectSlots operator and casino products supplier Entertainment Gaming Asia (EGT) has a plan to diversify its revenue stream but it says it’s a secret.

The Nasdaq-listed EGT reported a net loss of $2.7m in the three months ending Dec. 31, but $2.6m of this loss was a non-cash impairment related to infrastructure write-downs at its Dreamworld Poipet slots hall in Cambodia.

Total Q4 revenue was down 12% year-on-year to $7.3m, with the decline blamed on fewer casino orders for its gaming products. While gaming operations revenue rose 15% to $4.7m, gaming products earned $2.6m, down from $4.2m in Q4 2014.

In addition to Dreamworld Poipet, EGT supplies slots to NagaCorp’s flagship NagaWorld property in Phnom Penh and a casino in Thansur Bokor. These Cambodian operations reported net win per day per machine rising 27% to $164. EGT also supplies slots to gaming halls in the Philippines, where net win per unit inched up 3% to $67.

For the year as a whole, revenue rose 41% to $31.5m, with gaming operations up 11% to $18.1m and gaming products more than doubling to $13.4m. Net income swung to $820k from a $2.8m loss in 2014, which was dragged down by costs associated with the untimely closure of the Dreamworld Pailin slots hall.

EGT CEO Clarence Chung said the company is currently sitting on $31m in cash and equivalents, which should help EGT through what it expects to be a challenging 2016. The company just finished unfavorably rejigging its NagaWorld slots deal, which had been a driving source of cash flow, while chip and plaque orders were expected to fall with fewer new casino openings on the horizon.

Chung said EGT was working on a new project, which, if successful, “could potentially have contributions” to 2016’s revenue. The project involves a brand new market with “attractive long-term growth potential for the company,” but the project “remains in the early stages” and EGT won’t share further details at this time.

On the ensuing earnings call, Chung was challenged on his definition of “coming soon,” with one analyst noting that this wasn’t the first time Chung had hinted at new projects in the development pipeline. Chung would only say that EGT had begun work on this new project within the last couple of months and vowed to provide further details “within the next one to two months time.”

Dashing hopes that EGT might be planning a $500b integrated resort on Saturn’s outer ring, interim CFO Traci Mangini confessed that the project was “relatively smaller” in cap-ex terms, suggesting that EGT would have $30m of its $31.4m left over even after funding this mystery project.

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