Analysts applaud strong performance
It was a very good year for NagaCorp. According to a filing to the Hong Kong Stock Exchange, the Cambodian casino giant posted a 26 percent rise in gross gaming revenue for the year that ended December 31. GGR came in at US$480.6 million, while gross profit increased 20 percent to $327.8 million. EBITDA was up 30 percent to $228.5 million.
According to the Asia Gaming Brief, VIP rollings increased 27 percent to $7.9 billion, mass-market table play increased by 18 percent to $550.2 million and mass-market slots were up 16 percent to $1.4 billion. As a result, the company’s board has recommended a final dividend of US$1.89 per ordinary share.
Union Gaming analysts said Naga “remains one of the only marquee names in Asian gaming that continues to deliver solid earnings growth despite the challenging gaming macro. As we look out to the balance of 2016 and into 2017, we continue to see double digit earnings growth for the company … most of which will be delivered by the high-margin, high-visibility mass market and slots segments.”
Even more, the firm noted, “Contrary to the peer group, we look for Naga to continue to grow earnings associated with VIP gaming, although (importantly) the company’s exposure to this volatile segment remains low at under 20 percent of gross profit.”
GGRAsia cites analysts who add that the firm will benefit in 2016 from additional flights between Phnom Penh, home of NagaWorld, and China. Bassaka Air launched international services between Macau and Phnom Penh last March last year, and added service to Changsha and Xi’an in December. Three additional routes to and from China will be added this year.
“We are particularly excited about this driver of mass-market volume over the near and medium terms,” said Union Gaming analyst Grant Govertsen.
Analysts at CIMB Securities Ltd. also said the flights will “help to increase Chinese mass visitation.” The brokerage has increased its gross-margin forecast for NagaCorp for “fiscal years 2016 and 2017 to 65 percent for both years.
“While NagaCorp is cutting back on its junket incentive program,” wrote the CIMB team, “our view is that NagaCorp may still, in certain special circumstances give extra incentive to junkets provided that the junkets bring in strong traffic flow, especially higher-valued Macau junkets with Chinese customers. VIP tele-betting, started in January, could become a strong revenue driver over time.”
The opening of NagaCity Walk also will help, wrote the analysts. A deluxe shopping district adjacent to the casino resort will open later this year.
