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Donaco’s Poipet gamble pays off

Donaco’s Poipet gamble pays off

Casino operator Donaco International Ltd posted a seven-fold increase in revenue in its first full-year financial filing since acquiring the Star Vegas Resort and Club in Banteay Meanchey province’s Poipet commune, according to the company’s audited annual report, released yesterday.

The Australian-listed company reported $109.5 million in revenue and a net profit of $43 million during the fiscal year ending in June – its first positive gain since 2014, when it recorded a loss of over $2 million.

The Star Vegas Resort and Club on the Thai border in Cambodia generated the lion’s share of the group’s revenue, at some $92 million, far outpacing its Aristo International Hotel located near the Chinese border in Vietnam.

While the company previously reported a total unaudited net profit of $58.2 million for the financial year, the report noted that due to Star Vegas exceeding its target, it had to pay a $15 million management fee to the unnamed Thai-based operator of the casino under its original purchase agreement.

“The underlying net profit after tax of $43 million is a better reflection of the ongoing earnings that we achieved in the business,” CEO Joey Lim said in the report.

Donaco completed its $360 million acquisition of Star Vegas last July and released the detailed structure of the acquisition that saw a $240 million buyout for the facility and $120 million credited in the issuance of ordinary shares.

The company reported that under its ownership, earnings increased 21 percent compared with the previous year, primarily on the back of shifting away from the Chinese VIP gamers visiting the company’s Vietnamese facility, while targeting the Thai mass market segment.

“We deliberately shifted our focus to mass market and premium play and away from the VIP segment,” Lim said in the report. “This initiative has seen a significant increase in patronage, but also produced a lower bet size, which has had the benefit of reducing the volatility in earnings at the Aristo.”

According to the annual report, Star Vegas currently has more than 100 gaming tables, 1,500 slot machines and 385 hotel rooms.

As of late September, Donaco has been operating an additional 40 tables and 50 slot machines at the neighbouring Star Paradise facility, and has exclusive rights to purchase the operation “provided it is attractive to do so from Donaco shareholders’ perspective,” the report noted.

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