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Naga bets on mass market

PHNOM Penh’s only casino, NagaWorld, has refocused strategy away from targeting high rollers towards concentrating on mass market gamblers, officials from parent company NagaCorp said yesterday.

NagaCorp – which has exclusive rights to operate a casino within a 200 kilometre radius of Phnom Penh – is starting to target mass markets in the hope of drawing steady yields.

“Our remodeling strategy is focused on the fact that we want to build predictable results … sustainable results, rather than just explosive growth,” Kevin Nyland, Naga-Corp’s vice president of investor relations, said yesterday.

His statement followed first- half results released last week that showed NagaCorp’s net profit for the first six months totalled US$21.1 million, up 83 percent from $11.5 million for the first half of 2009.

But although analysts noted the strong profits for NagaCorp, the data provoked mixed reviews.

Hong Kong-based Sun Hung Kai Financial said Naga-Corp lacked major development plans and labelled its future growth profile “unexciting”.

“We believe the [company] lacks upside catalysts given its cautious focus on local patrons,” it said in a report released on Monday.

However, Las Vegas-based Union Gaming said NagaCorp had beaten expectations during the first half of the year, and that increases in local
patronage augured well for the casino’s prospects.

Noting that only foreign passport holders were allowed to engage in gambling in Cambodia, it said Ministry of Commerce statistics pointed to an increase in expatriates living in the capital, a factor that “ultimately accrues to NagaWorld”.

Revenues from the mass gaming market segment, comprising the public floor and gaming machines, were responsible for 70.2 percent of the $67.1 million in total revenue – a sharp contrast to its 46.4 percent revenue contribution last year.

Kevin Nyland said the casino continued to operate its “VIP player” business, but was taking a more conservative approach to junkets.

“We have less of an emphasis on traditional junket business and more focus on the direct mid-range VIP players,” he said.

Junket revenue fell to 29.8 percent of total revenue from 53.6 percent for the first half of last year, bringing in $20.2 million this year from $34.1 million in 2009.

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