Donaco junket changeover hurts VIP performance

Donaco International recorded strong performance in its main hall and slot machine businesses for the first four months of the 2018 financial year, but its VIP business saw mixed results.

Donaco CEO Joey Lim, addressing shareholders at the AGM, said that its Cambodia property, Star Vegas, was impacted by the transition to a new set of VIP junket customers due to a change in active junkets at the property.

As a result, VIP rolling chip turnover at Star Vegas for the four month period was well below last year, said Donaco. This has however, been offset to some extend by a high VIP win rate, particularly in July and August.

At Aristo, the opposite occurred, said Donaco, with VIP rolling chip turnover substantially higher than last year (up by 136 percent), but with a weaker win rate.

As a result, the group recorded unaudited four month revenue of A$30 million, while group EBITDA for the year to date is $13.7 million.

“We are rapidly gathering momentum at Star Vegas… so we do expect a significantly stronger remainder of the year,” said Lim.

Donaco said it has been introducing new junkets to replace the old. It also mentioned its partnership with Vivo Tower Limited to sign up international junkets and bring in VIPs from all around Asia.

Lim however als noted that the company has found it necessary to commence legal proceedings against the former Thai vendor, who continues to operate gaming activities without Donaco’s consent.

“Discussions are ongoing with a view to resolving all matters, but in the meantime we have now lodged an application for an injunction with the Cambodians courts, and we have also taken steps to initiate arbitration proceedings in Singapore,” said Lim.

Regarding its push for more international visitors, Lim said the company has been busy upgrading the non gaming facilities at Star Vegas.

The new non-gaming facilities includes a Chinese restaurant opened in early November, a new cafe and video arcade for families to open next month, and a new karaoke club due to open in December.