Logo of Phnom Penh Post newspaper Phnom Penh Post - Naga profits hit jackpot again

Naga profits hit jackpot again

Traffic passes in front of Phnom Penh’s landmark NagaWorld hotel and casino complex.
Traffic passes in front of Phnom Penh’s landmark NagaWorld hotel and casino complex. Heng Chivoan

Naga profits hit jackpot again

NagaCorp’s winning streak shows no signs of letting up, with the Hong Kong-listed casino operator posting another impressive half-year result, reporting profits up more than 20 percent year-on-year during the first six months of 2017 on a surge in VIP rollings and visits to its main gaming floor.

Gross gaming revenue soared nearly 40 percent year-on-year to $386.8 million at its NagaWorld hotel and casino in Phnom Penh, while net profit increased 20.3 percent to $150.6 million, the company said in a filing late Monday of unaudited results for the first six months of 2017.

The company attributed the growth and business volumes to the continued confidence in Cambodia’s political climate and social order, which it said had created favourable economic conditions and was increasing visitation, especially from China. It added that “confidence in the operating environment leads to increasing economic activity, resulting in increasing numbers of investors and a growing expat population in Phnom Penh and driving footfall into NagaWorld.”

NagaCorp also linked the performance to a strengthened balance sheet and rising international status. The company’s assets were valued at $5.4 billion in March 2017 by Colliers International, while it remains debt-free.

“As a consequence of the strengthening balance sheet, players are expressing more confidence, checking in more money, placing higher bets and generating a significant increase in business volume, especially in VIP rollings, which increased by 71 percent,” the company said in the filing.

The increase in VIP rollings, which raised the total to $7.8 billion during the period, generated $210.5 million in VIP market revenue, an 89 percent year-on-year increase.

NagaCorp also reported steady growth in the mass market segment, with revenue from main floor tables increasing 20.2 percent year-on-year to $74.5 million. Public floor table buy-ins and electronic gaming machine bills-in increased by 23 percent and 15 percent, respectively, during the period.

The company attributed higher traffic at NagaWorld’s main gaming floor to the continued growth of Cambodia’s tourism market, particularly visits from China, which recorded 36 percent growth during the first five months of the year.

Nongaming revenue, which covers hotel, food and beverage, and entertainment revenue, increased 29.8 percent year-on-year to $14.8 million during the period. The company said this growth came “primarily from higher occupancy and average room rates as well as better performance across all the food and beverage outlets”.

The company’s revenues are expected to grow significantly with the completion of an extension to NagaWorld, known alternately as the TSCLK Complex or Naga2. The massive $369 million development, slated to open in the fourth quarter, will double the company’s hotel space and gaming capacity.

Naga2 is expected to generate $113 million in incremental EBITDA during its first full year of operation, gaming-focused brokerage Union Gaming Securities Asia said last month.

Grant Govertsen, managing director of Union Gaming, said yesterday that the projections anticipate very little cannibalisation of NagaWorld’s existing facilities.

“The reality is that the existing property is running at or near capacity so it is likely that the addition of new rooms and gaming positions at Naga2 will achieve high levels of utilisation in short order,” he said.

NagaCorp reported $4 million in tax expenses during the first six months of 2017, compared to $3.7 million during the same period a year earlier. It attributed the increase to a nominal rise in its monthly gaming obligation payments to Cambodia’s Ministry of Economy and Finance (MEF), which increased to $462,362 per month during the period from $410,987 a year earlier, while its monthly non-gaming obligation remained unchanged at $214,338.

In 2016, NagaCorp made an additional tax payment of $16.6 million after a Cambodian government audit identified “discrepancies” in the company’s 2014 tax filings. The settlement came after the government deemed a clause that had exempted the company’s flagship 700-room hotel and casino – which opened in 2004 – from taxation of non-gaming revenue until its construction was complete had expired.

NagaCorp described the tax settlement as a “one-off” payment, noting in its latest filing that “as at the date of this announcement, there is no additional obligation, if any, for the period”.

MEF officials could not be reached yesterday to comment on the possibility of an additional tax obligation this year. Many analysts, however, have already included it in their financial projections.

“As it relates to taxation, our forecasts always assume that there could be an additional tax paid at some point during the year (similar to the last two years), so if the government were to assess any additional taxation it is unlikely to have an impact on our forecasts,” Govertsen said.

Michael Ting, a gaming analyst at CIMB Securities, said he would not expect the government to demand an additional tax payment this year, adding that the tax structure for the Kingdom’s gaming industry is due to be revised by new legislation.

“The government is still looking to publish its new gaming regulation by end of the year or next,” he said.

MOST VIEWED

  • Cambodia rejects UN rights claim

    Cambodia's Permanent Mission to the UN Office in Geneva on Friday hit back at David Kaye, the UN special rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression after he raised concerns over the repression of free speech and

  • Snaring may spawn diseases

    The World Wildlife Fund (WWF) has warned that snaring of animals has become a crisis that poses a serious risk to wildlife in Southeast Asia and could spawn the transmission of zoonotic diseases to humans. Its July 9 report entitled Silence of the Snares: Southeast Asia’

  • Ex-party leader, gov’t critic named as secretary of state

    A former political party leader known for being critical of the government has been appointed secretary of state at the Ministry of Rural Development, a royal decree dated July 9 said. Sourn Serey Ratha, the former president of the Khmer Power Party (KPP), told The Post

  • Residence cards set for over 80,000 immigrants

    The Ministry of Interior plans to grant residence cards to more than 80,000 immigrants to better keep track of them. The ministry announced the plan on July 10, following the results of an immigration census. “An inter-ministerial committee and many operational working groups have been set up

  • Kingdom produces PPE gear

    Medical supplies from Cambodia have been donated to member countries of the Asian Development Bank (ADB) to assist in the fight against Covid-19, said an ADB report published on July 9. The report stated that the supplies were donated as a response to global efforts to

  • Kingdom, US vow stronger ties

    At an academic forum on Saturday to celebrate 70 years of Cambodia-US diplomatic ties, Cambodian researchers and officials expressed hope of encouraging US investments and for that country to deepen and improve its bilateral relations. Held at the Royal Academy of Cambodia, it reviewed the past 70

  • Fifteen Cambodians from Saudi get Covid-19

    The Ministry of Health on Sunday confirmed 15 more imported cases of Covid. The 15 men ‒ all Cambodian aged 21 to 33 ‒ arrived from Saudi Arabia on Friday via a connecting flight in Malaysia. They were travelling with 79 other passengers, three of them women. The ministry said 80 of the

  • Ministry requests school opening

    The Ministry of Education, Youth and Sport on Thursday said it would request a decision from Prime Minister Hun Sen to allow a small number of schools to reopen next month. Ministry spokesman Ros Soveacha said if the request is granted, higher-standard schools will reopen

  • Kingdom eyes India FTA, China deal set for August

    Cambodia is studying the possibility of establishing a bilateral free trade agreement (FTA) with India to open a new market with the second-largest regional economy. This comes as an FTA with China is scheduled to be signed next month while similar negotiations with South Korea

  • Judge lands in court after crashing into alleged thief

    Sen Sok district police on Thursday sent a Koh Kong Provincial Court judge to the Phnom Penh Municipal Court on manslaughter charges after he crashed his car into a woman riding a motorbike on Wednesday, killing her. District police chief Hour Meng Vang told The