Cambodian casino operator NagaCorp saw its net profits spike by two-fifths in 2017 as VIP gambling turnover more than doubled.
On Tuesday, Hong Kong-listed NagaCorp filed its official 2017 earnings report card, which should earn the operator a gold star from investors. Gross gaming revenue increased 85% to US$926m, earnings rose 25% to $319.7m and net profit improved 39% to $255.2m.
NagaCorp’s flagship NagaWorld property in Phnom Penh got a boost last November from the launch of Naga2 (pictured), which added an additional 1k hotel rooms and 300 gaming tables to the property’s existing elements, and allowed the venue to take advantage of Cambodia’s rising tourism levels.
Tourist visitation to Cambodia was up 12% to 5.6m visitors last year, while arrivals at Phnom Penh International Airport were up 21%. China (22%), Vietnam (15%) and Laos (9%) remain the top three sources of arrivals, and the China figure was up 46% from 2016.
VIP gambling turnover rose 142% to $21.1b, while VIP win rate improved 0.4 points to 3%, which pushed VIP revenue up 177% to $625.3m. Mass market table buy-ins rose 28% to $788m and mass table revenue improved 15% to $149.7m. Mass market electronic gaming machine bills-in rose 21% to $1.8b and EGM revenue inched up 4% to $151m.
While the VIP market accounted for 65% of NagaCorp’s 2017 revenue, it accounted for only 33% of gross profit, while the mass market business accounted for 32% of revenue and 62% of profit thanks to a staggering 98% margin. Non-gaming revenue was a mere 3% of revenue and 5% of profit.
Despite the costs of launching Naga2, NagaCorp has one of the industry’s more enviable balance sheets, with cash and equivalents of $52.8m at the end of 2017 and no outstanding external borrowings.
NagaCorp expects the good times to continue rolling into 2018, given its expanded capacity, its thriving relationships with VIP junket operators, and the increased tourism to Cambodia’s capital. The government hopes to boost international tourism to 7m annual visitors – 2m of these from China – by 2020.
NagaCorp offered an update of sorts on its Naga Vladivostok resort casino project on Russia’s far eastern shores. NagaCorp claims the project “remains broadly on schedule for operation by 2019” and that “certain key personnel” have been appointed to ensure the company’s first major international expansion continues on track.