Cambodian gaming operator NagaCorp saw its loss for the first half year fall well within expectations, totaling $963,000, still a strong reversal from the $82.97 million in profit recorded in 1H23.
The group had previously issued a profit warning, indicating an expected loss of between $6.9 million or a profit of $3.1 million – largely linked to an impairment over its gaming and resort project in Vladivostok, Russia.
According to results released on Tuesday, the group recorded an impairment of $89.11 million during the period on ‘property, plant and equipment and repayments for construction in relation to the Vladivostok Project’.
This was also within the range of $85 million to $95 million that the group had indicated it expected after an independent firm carried out an evaluation on the project.
Without the impairment, the group notes that it would have registered net profit of $88.1 million in 1H24.
Back in March of 2022, NagaCorp announced that it was suspending its Vladivostok project ‘indefinitely’ as it was ‘surrounded by various uncertainties’.
The project was envisioned to be an 11-storey four-star hotel with 279 rooms, a casino and a multipurpose concert hall with 2,000 seats and occupying nearly 55,000 square meters. The final planned complex was to occupy some 302,000 square meters and include 2,719 rooms and a water park.
Mass play on the rise
Overall, the group saw a 12 percent rise in its gross gaming revenue (GGR) for 1H24, reaching $283.39 million, largely due to a strong acceleration in mass.
Mass public floor tables revenue was up 33 percent, to $130.61 million, however mass market EGM (electronic gaming machine) revenue was down by 5 percent, to $61.33 million.
The group attributes the overall increase in business volume to ‘the reasonably sized expatriate community, visitors from ASEAN and to some extent the recovery of Chinese visitors patronizing NagaWorld in search of entertainment’.
Gross profit for the mass market segment was $170.8 million, 74 percent of the group’s total.
NagaCorp operates the only integrated resort in Cambodia’s capital of Phnom Penh, NagaWorld.
At the property, the group notes that ‘the footfall on the Mass Market areas continue to see a gradual increase and recovery’.
VIP figures slow
Looking at the VIP segment, Premium VIP saw a 4.1 percent reduction in revenue, totaling $60.33 million, as rolling chip volumes fell by 11.7 percent yearly, to $1.8 billion. The rolling chip volumes contrast with strong gains of 46.5 percent and 141.7 percent in 2023 and 2022, respectively. The win rate rose to 4 percent, from 3.7 percent in 1H23.
Gross profit from Premium VIP was $45 million, 20 percent of the group’s total.
Referral VIP fared relatively better, with revenue up 17.6 percent, to $31.1 million, despite rolling chip volumes falling by 12.7 percent to $819.56 million. The win rate rose to 3.8 percent in 1H24 from 2.8 percent in 1H23.
Gross profit from Referral VIP was $7.5 million, just 3 percent of the group’s total.
Expectations
Looking ahead at the group’s $3.5 billion Naga 3 project in Phnom Penh, the group notes that the foundation and structural works for the basement floors ‘have been broadly completed’, while ‘clearing, cleaning and defect rectification works are on-going and are expected to be fully completed by the fourth quarter of 2024’.
Mid-last year, the group indicated that it was pushing back the opening date of Naga 3 by four years, to September of 2029.
Looking forward, the group notes that it is ‘optimistic about its long-term growth prospects and outlook with Cambodia’s ongoing economic recovery and political stability’.
It adds that it is ‘confident that the tourism sector will maintain its recovery momentum, driven by the return of international travel’ and that ‘Nagaworld […] will continue to benefit by attracting more visitors seeking entertainment and luxurious lifestyle offerings at competitive process and value’.
The group does not recommend the payment of an interim dividend for the period.
