Gaming revenues at Cambodia’s NagaCorp were up 27% in the first half on hefty year-on-year increases in VIP and mass-market table play.
Hong Kong-listed Naga (HKSE: 3918), whose NagaWorld monopoly in Phnom Penh is the country’s largest gaming complex, reported a 22.3% increase in main-floor drop for the six months ended 30th June, resulting in a 19.8% increase in revenue to US$53.1 million.
VIP volume expressed as rolling chip turnover was up 20.3%, and boosted by a favorable hold rate (3.55% versus 2.65% in H1 2013), generated a 61.3% increase in revenue to $86 million.
The strong performance at the high end reflects a focus that began in earnest last year on developing and expanding junket relationships through beefed-up incentives and amenities, including the recent completion of renovations in the hotel to add 47 more private tables.
“The company has been in talks with the Macau junkets to source the Chinese VIP players for quite a while,” Credit Suisse analysts Kenneth Fong and Isis Wong said in a client note.
Chinese play also figures prominently on the mass side, and Naga has purchased two Airbus 320 jetliners that will be leased out and operated in collaboration with Chinese travel agency CITS.
“We continue to view the play out of the Chinese execution strategy as the key catalysts,” the Credit Suisse team said.
Total gaming revenue rose from $141.7 million in H1 2013 to $180.3 million, and it’s expected that both mass and VIP will benefit significantly with the completion of Naga 2 in 2016. Plans call for the addition of 1,000 hotel rooms, up to 300 table games and 500 machine games. Construction of a related retail and non-gaming complex known as NagaCity Walk is scheduled for completion the end of this year ahead of a slated mid-2015 opening. The Walk likewise will enhance the total offering, particularly on the mass side. Non-gaming revenue property-wide was up a healthy 7.5% in the first half. At the same time, renovations connected with the construction have disrupted traffic in certain slotsareas, and EGM revenue, which constitutes about 23% of the gaming mix, was down 6.3% in the first half to $41.2 million.
Net income was up 7.6% to $67.6 million on an 11.8% increase in EBITDA to $86.6 million, and the company declared an interim dividend of 2.07 cents (HK$0.16) payable on 17th September.
