Strong mass and accelerating VIP boosts Naga revenue

Cambodia-based casino operator NagaCorp Limited saw a 181 percent increase in gross gaming revenue for the first quarter of 2018, according to the company’s latest unaudited operational results.

Mass-market business led the charge, with mass table buy-ins up 56 percent to $263.8 million, while EGM Bills-in increased 24 percent to $515.4 million.

Union Gaming analysts said the mass results indicate a lack of cannibalization between NagaCorp properties, namely NagaWorld and Naga 2, and even suggests an under-supply of mass tables in the new property.

Naga 2 opened in November 2017, offering 903 hotel rooms, 65 individual spa rooms complete with their own sauna and steam showers, a 2,200 seat theatre, more restaurants including the impressively designed Hall of Golden Chimes, and duty free retail at NagaCity Walk which will house over 200 luxury brands under one roof, along with 35 tables and 300 slot machines, as well as a 24 hour noodle bar and other refreshment areas.

More mass and VIP gaming areas will open in due course, including the Sky Casino which likely house another 10 VIP gaming tables.

“It is observed that there is minimal cannibalization observed between the two properties, with most players on existing NagaWorld property intact or increased and Naga2 witnessing numerous new faces and customers never seen in the past.”

The company also saw an increase in VIP business volume during the quarter, rising 61 percent year-on-year to $5.6 billion.

NagaCorp said this was due mainly to an increase of business in both properties, which was more pronounced in Naga 2, “where customers demand for more tables and higher table limits.”

NagaCorp also noted a new Incentive Agreement signed with Macau-based junket operator, SunCity, commencing on March 1, 2018, which contributed to an increase in the number of players and rolling.

“An increase number of South East Asian players, noticeably from Thailand, have also been observed in addition to the traditional large number of Malaysian and other customers from the regions,” said the company.

The VIP volume was however down from the previous quarter (17Q4). Union Gaming analysts said they believed this to be due to VIP being seasonally slower in Q1, and that much of the play in 17Q4 was front-end loaded and hasn’t yet returned.

Going forward, VIP should begin to pick up in the second quarter of the year with a new Macau junket to begin operating in the next quarter, said the brokerage.

NagaCorp also noted an increase in visitation and tourism growth, with international arrivals to Cambodia increasing 12 percent to 596,241 compared to the prior year period. In particular, visitation from China increased by 91 percent to 153,207 visitors.

“As a result, the average daily foot traffic of the overall property has increased significantly and has helped the mass market business. It is observed that the month of March 2018 has seen noticeable increase of visitors compared to January 2018 and this has put significant pressure on the planned limited supply of number of mass market tables,” said the company.