Operator News
Cambodia – Star Vegas and Aristo reopenings see Donaco return to positive EBITDA in December
By Phil - 1 February 2021
Since the reopening of the Star Vegas Resort in Cambodia in late September, and the Aristo International Hotel in Vietnam, the December quarter was a turnaround period for Donaco with a return to positive EBITDA of A$3.70m and negative EBITDA of A$0.13m respectively, resulting in positive EBITDA of A$3.57m for the overall group.
The result was driven by a number of strategic initiatives executed by the new Board and Executive team to weather the impact from the pandemic, including a shift in customer targeting, with a renewed focus on attracting clientele from the local region to Star Vegas, to in turn reduce international staff expenses. This was combined with a continued cost control strategy, including the adjustment of service provider agreements, restructuring arrangements with gaming machines and junket operators and the introduction of retail outlets.
In tandem with these initiatives, the gradual easing of COVID-19 restrictions in the region has improved the position of the business, and the casinos have operated flexibly as conditions dictate. Donaco’s strategy for CY21 will build on these pragmatic initiatives, underpinned by a strengthened balance sheet and cost control strategy. The Company is also pleased that the dispute surrounding the Star Vegas casino has now formally concluded.
Non-Executive Chairman Porntat Amatavivadhana said: “The December quarter was a turnaround period for Donaco with a return to positive EBITDA. We are extremely encouraged that since the casinos’ limited reopening, Star Vegas is no longer making a loss and the outlook for Aristo is increasingly positive.” Our strategy is bearing results, underpinned by targeting clientele from the local region, whilst keeping tight control over our costs following the revision of some service provider agreements. We are also experiencing a gradual easing of COVID-19 restrictions across South East Asia and the situation is expected to ameliorate.
“Our strategy for 2021 will build on these pragmatic initiatives, underpinned by a strengthened balance sheet as the performance from Star Vegas and Aristo continues to improve and provides a solid platform for growth,” he added. “The reduction of our debt level also offers us some clear air as we explore additional options to access the gaming sector, and take advantage of this growing market.”
Star Vegas reopened in September 2020 and despite operating on a limited basis, the casino experienced a return to positive EBITDA in Q2 FY21 as a result of attracting clientele to the local region. Following the reopening, the rolling Chip VIP turnover of A$132.75m and the net revenue of A$5.57m was
recorded for the quarter. Management has kept tight control measures on the limited operations, with operating expenses reduced to
A$1.86m for the period, compared to A$8.93m in the previous corresponding period.
The Aristo business is also operating on a limited basis since reopening in May 2020. The border with China, the country from where the vast majority of Aristo’s patrons originate from, remains closed as part of COVID-19 restrictions. Despite this, Aristo is experiencing a positive outlook as the situation
continues to improve.
Compared to the December 2019 quarter, the business recorded a lower rolling chips VIP turnover of A$9.40m and net revenue was A$0.43m as a result of the impact from COVID-19. Donaco has proactively implemented several cost-control initiatives to reduce operating expenses to A$0.56m for the period, versus A$2.72m in the December 2019 quarter. As a result of the COVID-19 impacts, EBITDA was down to negative EBITDA of A$0.13m.
