VIP may slow with reduced junket incentives
NagaCorp Ltd.’s reported gross gaming revenue rose 35 percent year-on-year in the first quarter of 2016 to $153.8 million, thanks to strong growth in both the VIP and mass markets, according to Citi Research. Citi analysts said the Hong Kong-listed firm will maintain “solid GGR growth” throughout 2016, and added that this would be a “growth year” for NagaWorld, the company’s premier resort in Phnom Penh, Cambodia. But analysts also estimated a slowdown in NagaWorld’s mass market GGR growth “to circa 12 percent (from 18 percent last year), reflecting the moderating visitation growth,” they said in the research note.
The Cambodian casino’s VIP rolling chips increased 65 percent year-on-year from January through April, reported the Phnom Penh Post. NagaWorld’s “Macau-based junkets should continue to fuel VIP GGR growth, albeit at a much lower rate” than last year, due to reduced incentives for junket operators, Citi said. The research group projected 15 percent VIP GGR growth in 2016, compared to 27 percent last year.
NagaWorld, the only legal casino in Phnom Penh, has 287 gaming tables and 1,656 electronic gaming machines. It posted $172.6 million in net profit in 2015.
Lorien Pilling, director of Global Betting and Gaming Consultants, told the Post that NagaCorp must “balance the costs of servicing the high-end players and the revenues they bring.” NagaCorp’s 2015 annual report indicates that about 70 percent of the company’s $175.8 million cost of sales went to covering the tab of its five largest junket operators, which collectively brought in just under a third of the company’s $503.6 million revenue.
