Logo of Phnom Penh Post newspaper Phnom Penh Post - NagaCorp VIP program questioned

NagaCorp VIP program questioned

A pedestrians stroll past NagaWorld in Phnom Penh
A pedestrians stroll past NagaWorld in Phnom Penh last August as it undergoes renovations. Hong Menea

NagaCorp VIP program questioned

Citi Research, the strategy and analysis arm of Citigroup Inc, one of the world’s largest financial firms, has questioned NagaCorp’s VIP junket program in a recent report that also cites cross-border competition and tourism failings as potential threats to the program’s success.

Citi Research’s analysis was published on NagaCorp’s website on April 8 in response to the casino firm’s unaudited first-quarter results, which show a 14 per cent increase in VIP gambling during the first three months of the year.

“Failure to attract tourists to Phnom Penh could cut traffic at the casino and lower gaming revenue. Another downside risk is the perceived ‘weak’ control environment in Cambodia, giving rise to money laundering concerns,” the eight-page report says, adding that NagaCorp’s unaudited VIP results were below estimates.

Citi Research cautioned the company against investing in non-gambling ventures and said competition from Chinese gaming hub Macau, would also have a strong negative impact on NagaCorp’s junket program, as would the rise of any large-scale casino industry in Thailand or Vietnam.

“A sustained slowdown in Macau gaming would also threaten Naga’s strategy of targeting the ‘Poor Man’s VIP’ as Macau junkets would be forced to act more competitively with regards to all segments of the VIP market,” the report states.

The analysis of NagaCorp’s VIP junket scheme, which was launched in March 2013 and earned the firm more than $133.1 million last year, was partly backed by fellow multinational financial services corporation Morgan Stanley.

In a report also published on NagaCorp’s website on April 8, Morgan Stanley states that the gambling operator’s first-quarter VIP spending and junket figures were weaker than expected and that increasing competition from other ASEAN gaming markets especially the Philippines – could pose a certain degree of competition.

NagaCorp, owner of Phnom Penh’s only casino, NagaWorld, reported a 16 per cent increase in revenue for the first quarter of 2014, according to the latest unaudited financial statement.

Gamblers played more than $115 million on public gaming floor tables during the first three months of the year, up 24 per cent on 2013 figures. Electronic gambling machine players, meanwhile, spent $273 million, up 10 per cent.

NagaCorp reported profits of more than $140 million in 2013, according to their February 12 annual financial statement, which also detailed the firm’s plan to introduce regular chartered flights between Macau and Phnom Penh in an effort to bolster the VIP market.

“To cope with the expected increase in VIP headcount, the Group is completing level three of the hotel block and the rooftop of the pool wing to create additional VIP junket gaming areas that will potentially add up to 63 VIP gaming tables, which is targeted for completion in 2014,” the statement said.

A $369 million second Phnom Penh casino named Naga2 and a $350 million casino project in Russia were also outlined in the annual financial statement.

NagaWorld could not be contacted for comment.

MOST VIEWED

  • Breaking: US House passes 'Cambodia Democracy Act'

    The US House of Representatives in Washington, DC, on Monday, passed the “HR 526 Cambodia Democracy Act”, also known as the Cambodia Democracy Act of 2019. If signed off by the president, the bill will allow two major sets of action to be taken against high-ranking Cambodian

  • ‘Zero-dollar’ tours under fire

    Minister of Tourism Thong Khon has blamed “zero-dollar” tour operators for the decrease in foreign tourists to Angkor Archaeological Park in the first half of this year and has called for action against them. Angkor Archaeological Park received 1.24 million foreign visitors in the first half

  • Some jobs off limits to foreigners from August

    Beginning from the second week of August, foreigners will be banned from driving taxis and tuk-tuks, as well as being motorcycle delivery drivers, street food vendors, hairdressers and product distributors among other lower-income jobs. Some white-collar jobs such as the head of human resources will

  • Chinese-owned shops are on the rise in central Phnom Penh

    Informal businesses owned by Chinese nationals are on the rise in central Phnom Penh, especially in Tonle Bassac commune, surrounding Koh Pich. Such businesses have sprung up notably in Central Market, Orussey Market, Sovanna Shopping Mall, Rattana Plaza, as well as Kakab commune across from