Asian casino operator Donaco International Ltd says it swung back to profitability in the third quarter, despite internal upheaval and ongoing legal issues.
On Friday, the Australia-listed Donaco issued a trading update for the three-month period ending September 30, during which the company said its results showed “a very strong improvement” from the same period last year.
Group revenue rose 42.3% year-on-year to AU$24.25m (US$16.6m), while earnings nearly tripled to AU$8.9m and net profit after tax hit AU$3.8m compared with an AU$1.76m loss in Q3 2018.
Donaco credited the turnaround to increased revenue, particularly at its Aristo International Hotel property in northern Vietnam, and stricter cost controls, including “the departure of unprofitable junkets” at Donaco’s main casino, the Star Vegas in Poipet, Cambodia.
The junket rethink was overseen by “the new management team” at Star Vegas, which is led by new CEO Paul Arbuckle, who took over the reins in June. Donaco has since revamped its board of directors following the ousting of brothers Joey and Ben Lim in July in response to vocal shareholder complaints regarding the company’s sorry state of affairs.
The subsequent “rationalizing” of the junket arrangements at Star Vegas led to the property’s VIP turnover falling nearly 39% to THB12.1b (US$$400m). However, VIP win rate jumped over a full point to 3.55%, which helped boost the property’s net revenue by nearly 3% to THB358m while earnings rose 6.7% to THB128.2m.
It wasn’t all roses at Star Vegas, as average daily visitation was down nearly 16% due to what the company claimed was “increased competition in the Poipet area.”
Donaco’s update made no mention of the online gambling operations at Star Vegas, which launched last August after years of delay. Those operations appear to be living on borrowed time following the Cambodian government’s declaration in August that it would issue no new online licenses and existing licensees would be forced to wrap up their operations by the end of the year.
The Aristo property reported VIP turnover soaring to US$247.2m from just $7.7m in Q3 2018 and daily visitation was up by two-fifths, which helped push the property’s revenue over $3.1m higher to $5m, while earnings jumped to $3m from just $190k.
Donaco’s recent history has been dominated by legal disputes involving Star Vegas, including the long-running fight with a Thai group that Donaco hired to run gaming operations at the adjoining Star Paradise casino. These same former partners are also seeking to terminate Donaco’s land lease on Star Vegas.