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Cambodia – NagaCorp booms in face of Macau slide

By - 14 August 2015

Cambodian operator Nagacorp has shown no signs of slowing in light of declining markets in Macau and Singapore with the operator of NagaWorld showing an increase of 42 per cent in Gross Gaming Revenues for the six months ended June 30 2015.

GGR hit the US$255m mark with VIP revenue increasing by 25 per cent to US$108m, mass market revenue increasing by 57 per cent to US$148m and net profit increasing by 49 per cent to US$101m.

NagaCorp stated: “Macau’s Gross Gaming Revenue declined 37 per cent for the first half of 2015. In contrast NagaWorld, which is situated in the Cambodian capital city Phnom Penh, recorded GGR growth of 42 per cent. For the Period, the Group’s revenue increased by 39 per cent to US$265.4mand net profit increased by 49 per cent to US$101m. The positive results were attributable to the increase in business volume from all segments of the gaming business. In addition, the Group received a non-refundable Electronic Gaming Machines negotiation fee from investors, which has been recorded as EGM revenue for the Period. As at 30 June 2015, NagaWorld had 262 gaming tables and 1,600 EGM.”

The Group achieved a growth of 11 per cent in Public Floor Tables buy-ins and 10 per cent in EGM bills-in. Gross profit margin remained at 95 per cent.

“The growth of Public Floor Tables is attributable to the steady growth in visitation to the property as well as the improvement in table game productivity,” the group added. “The group’s strategy in segmenting the public floor players with its concept of casino cells continued to work well; increasing overallvisitation and business volume to the property including the premium mass gaming areas such as NagaRock and Saigon Palace. During the Period, EGM revenue grew by 123 per cent, as a result of the EGM Negotiation Fee received, higher win-rate and an increase in bills-in of 10 per cent. The growth of bills-in exceeded tourism growth of 4.6 per cent.”

The group’s loyalty program, the Golden Edge Rewards Club, has been tracking well with increasing membership. During the Period, approximately 14,000 new members registered. This has allowed the group to continue its efforts to understand its members’ profiles, create targeted marketing promotions and rollout player development initiatives to drive visitation and increase spend per player on the mass gaming market.

The Group’s VIP Market comprises the players brought in by junkets, who are either under a commission or incentive program, and direct players without an intermediary. The overseas junket incentive program introduced since March 2013 has enabled the group to increase the existing table limits, whilst managing volatility and credit risk.

Rollings under the incentive program continued to grow. In the second quarter of 2015, the Group made progress by signing additional North Asian junkets under the incentive program. Total VIP rollings increased by 50 per cent to US$3.6bn and the overall win rate was three per cent (six month ended 30 June 2014: 3.6 per cent). As a result, total VIP gaming revenue increased by 25 per cent to US$107.5m.
The group added: “The continued downturn in the gaming sector in Macau offers opportunities for the group to further penetrate the regional and Chinese gaming market. The group offers better commercial terms to junket operators and agents as a result of NagaWorld’s low cost structure. The group has signed additional North Asian junkets who are seeking to diversify their operations to other parts of Asia during the Period. The 50 per cent increase in VIP rollings for the Period demonstrates NagaWorld’s incentive program’s success in promoting NagaWorld to a wider range of operators and players in the region. Moving forward, the group intends to improve its margins as it captures a larger share of the Asian VIP gaming market.”

It is collaborating with key Chinese outbound travel agents and an independent airline operator by using its commercial aircraft to bring Chinese tourists into Cambodia. The appeal of Cambodia as a travel destination for Chinese tourists is evident from the continued strong growth of Chinese visitation, which recorded a 22 per cent increase for the first half of 2015. Macau’s loss could well be NagaWorld’s gain.

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