Operator News
Cambodia- China’s border reopenings driving accelerated growth DNA Star Vegas
By Phil - 3 May 2023
Donaco International has reported a favourable turnaround for its casinos in Cambodia and Vietnam, resulting in group net revenue of A$7.5m and EBITDA of A$4.1m for the March quarter.
It has seen accelerated growth at DNA Star Vegas, which has reached full operational capacity, with travel flow at Aristo having significantly contributed to this success. It has an encouraging outlook mainly due to China’s reopening of its borders, leading to the gradual reopening of Aristo to full operations in the coming months.
The March quarter proved to be a highly accelerated period for Donaco with DNA Star Vegas (Star Vegas) returning to full operational capacity after more than a year of closure due to Covid-19 restrictions. The company has swiftly leveraged on improving tourism conditions in the region where it operates, with visitor headcount increased in the quarter. This was reflected in the quarterly numbers with Star Vegas generating net revenue of A$6.29m and EBITDA of A$4.17m.
Donaco’s Aristo International Hotel (Aristo), located in Vietnam, began a gradual reopening with encouraging momentum in the quarter. This was driven by international travel flow recommencing as mainland China, the country where the vast majority of Aristo’s patrons originate from, announced the full reopening of its borders from January 2023.
As part of its strategy to attract VIP visitors, Aristo implemented a change to the minimum monthly turnover to qualify as an active junket. The threshold was reduced from RMB 6 million to RMB 3 million, facilitating the return of junket operators and leading to the accelerated traction in VIP visitors. Additionally, Aristo began offering some complimentary services, such as room services and meals, to larger chip players in order to encourage player activity in the casino. This initiative proved successful in enhancing the overall guest experience and contributed positively to the Company’s financial performance.
As a result, Aristo generated net revenue of A$1.26m and EBITDA of $0.58m Group revenue reached A$7.55m with group EBITDA of A$4.07m.
The company said: “Donaco has kept its focus on disciplined cost control and as a result, cash holdings as at 31 March 2023 were A$16.55m. The strong cash position is a testament to the company’s prudent financial management and accelerated recovery and provides a solid foundation for future growth
initiatives.”
Donaco’s Non-Executive Chairman, Mr Porntat Amatavivadhana, commented: “The March quarter marks a significant turnaround for Donaco, with promising performance from DNA Star Vegas and early progress from the gradual reopening of Aristo. After a long period of impact from the pandemic, we are pleased to see positive signs of recovery and a promising outlook for the business. The recommencement of international travel flow, particularly from Chinese tourists, is a trend that is expected to benefit our operations in Cambodia and Vietnam.”
“With a solid strategy, we are confident in our ability to capitalise on these favourable developments and
continue delivering sustainable growth for our shareholders over the long term.”
Donaco is well-positioned to achieve sustainable earnings growth in both the near and long term, leveraging the gradual reopening of borders in key countries. Specifically, the recent reopening of Thailand’s and Cambodia’s international travel borders to fully vaccinated tourists is expected to continue benefiting the company’s operations in the coming months.
Donaco anticipates the performance at DNA Star Vegas to continue stabilising, resulting in increased visitor numbers. Moreover, the resumption of international travel from China since January 2023, presents a significant opportunity for the Aristo business. With a focus on scaling up while maintaining strict cost control, Aristo aims to resume full-scale operations in the coming months.
Looking further ahead, the construction of Sapa airport in Lao Cai, where Aristo is located, is envisaged to provide significant benefit once opened in 2025, with an annual capacity of 1.5 million passengers. Additionally, the recent recognition of Aristo as the only 5-star hotel in the Lao Cai province of Vietnam for five years, is a major opportunity for the business to attract new customers and enhance its reputation.
