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Asia – New casinos boost supply side of Entertainment Gaming Asia

By - 11 November 2015

New casinos might have hampered the operational side of Entertainment Gaming Asia but they have also helped boost the supply side.

Overall the company recorded revenues of $8.3m for the third quarter of 2015, an increase of 88 per cent compared to $4.4m in the third quarter of 2014.

The swing was due to increases in both the gaming operations and gaming products business divisions.
Gaming operations revenue was $4.5m for the third quarter of 2015, an increase of 13 per cent with daily net win per unit of $120 up 20 per cent. The increases were primarily due to improvements in the Cambodia operations partially offset by a decline in the Philippines operations.

Cambodia average daily net win per unit was $152 for the third quarter of 2015, an increase of 33 per cent whilst Philippines average daily net win per unit was $59 for the third quarter of 2015, a decrease of 18 per cent. The decrease in the Philippines was due to lower player traffic due to increased competition from new integrated casino resorts in Manila, one of which opened in March 2013 and another which soft opened in December 2014.

Revenue from gaming products was $3.8m for the third quarter of 2015 compared to $437,000 in the third quarter of 2014. The increase was primarily a result of higher product sales from new and existing customers, including a $2.2m order for a new casino opening in Macau, in the third quarter of 2015.
Clarence Chung, Chairman and Chief Executive Officer of Entertainment Gaming Asia, said: “The primary drivers of our performance in the quarter and year-to-date were the significant improvements in gaming products sales and gross margin as well as the growth in gaming operations revenue.

“Our gaming products business benefited from strong sales and production volumes for gaming chips and plaques for both a new casino opening and from existing customers, as well as increased sales of other high-margin third-party gaming products. With an attractive fourth quarter order pipeline, the gaming products division is on target to achieve record performance of over $13m in revenue for 2015. However, looking further ahead, we expect to experience sales fluctuations due to the natural uneven order flow for this business driven by the timing of orders for new casino openings,” he added.

“Increased player traffic and proactive marketing initiatives have resulted in continued improvement in average net wins in NagaWorld in the fourth quarter. Thansur Bokor and Dreamworld Poipet made small, yet positive, contributions to overall revenue growth and EBITDA in the third quarter of 2015. In the Philippines, the competitive landscape remains a challenge however, we continue efforts to improve returns on these assets and have seen average net wins return to the mid-$60 range in the month of October.

“We have been active in our efforts to secure new projects, in existing and new businesses, that would enable us to best capitalize on growth opportunities in gaming markets in Asia and, ultimately, replace cash flow from NagaWorld in the event we do not renew this contract by March 2016. We are in the early stages for one potential new project that we believe could provide an exciting opportunity for the company. We look forward to sharing more about this project as plans materialize in the coming months.”

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