Supplier News

Cambodia – Donaco looking to expand Star Vegas following 16 per cent growth

By Phil - 30 August 2016

Donaco International, operator of the Aristo International Hotel in Vietnam and the Star Vegas Resort in Cambodia, has seen its net profit reach A$77.2m (US$58.2m) for the year to June 30, turning around a loss of A$9m the year before.

Revenue, which came in at A$143.4m, was boosted by the A$360m acquisition of Star Vegas in Poipet, Cambodia, in July 2015 with these results the first to include a full year for the venue.
Joey Lim Keong Yew, Donaco’s Managing Director, said: “We are pleased to have delivered a strong operational result from both of our gaming assets, with a major part of our earnings this year coming from Star Vegas, which contributed A$120m in revenue and A$87m in underlying EBITDA.”

Star Vegas generated revenue of THB3bn (US$87.3m) for the full year, showing an increase of 15.8 per cent compared to the previous year.

Aristo International generated GGR of RMB58.7m (US$8.8m) marking an improvement of 16.2 per cent.

Mr Lim added: “Our business is also producing strong cash flow, generating A$48.7m of cash flow from operations and demonstrating our ability to convert EBITDA into cash flow. Our excellent financial performance has enabled us to announce our intention to pay a maiden dividend of 1 Australian cent per share, whilst maintaining our strong capital position and healthy balance sheet.”

Overall, Donaco is performing in line with analyst’s expectations at group level on a normalised basis, driven by strong performance from both the Star Vegas Resort and Club and Aristo International Hotel assets.

The company said it was considering expanding the gaming business at Star Vegas into the adjoining Star Paradise property.

“There is significant demand from new Thai junkets, who cannot be accommodated in the existing property, due to long-standing arrangements with existing contracted junket operators,” it explained. “The upgrading of the Star Paradise property, and construction of a new gaming hall, is being undertaken by Donaco’s Thai partner, at no cost to the Company. Due to a construction delay, the new gaming hall is now expected to be completed after June 2016. Discussions are still ongoing as to the business model most suitable to all parties, including pure gaming management arrangements, or leasing the entire facility. Negotiations are expected to be completed during the December 2016 half.”

The gaming operations at Star Paradise will be conducted under the Star Vegas gaming licence, and any agreement would involve minimal capital requirement from Donaco.

In terms of the Aristo International Hotel it added: “The marketing strategies for this business are based on increasing the number of mass market players visiting the property, in order to reduce the historical over-exposure to VIP players, which can cause high volatility in win rate and earnings. These marketing strategies have been successful in the 10 month period ending April 2016, with the number of casino visitors increasing by 61 per cent. The months of March and April 2016 saw new record visitation numbers of 12,881 players and 17,108 players respectively. However as these were mainly lower denomination players, the average bet size has declined.”