Cambodia – Strong Q2 from Star World sees Donaco’s profit match last year’sBy Phil - 29 August 2017
Donaco International has generated net profit after tax (NPAT) of A$54.6m for its full year to June 30 2017, exactly the same amount as in 2016, with strong second half recovery at Star Vegas, one of its casino operations in Poipet Cambodia.
Donaco CEO Mr Joey Lim said: “FY17 was a busy year for Donaco, as we laid the foundations for the transition to full management control of Star Vegas, and launched a number of international marketing initiatives. In addition to the deals announced with Vivo Tower, Poker King Club and the Asian Poker Tour, and building on our association with Manchester United, we have already engaged a number of new Thai junket operators after assuming management control of Star Vegas on 1 July 2017.
Star Vegas performed consistently with the market guidance provided, and recorded an EBITDA of US$60.5m to trigger the final management fee payable to the vendor. The business produced a strong June half performance assisted by the high win rate achieved on junket play, and the seasonal benefits which feature in the June half. Overall, for the full 12 month period, the EBITDA at Star Vegas declined by 6.3 per cent in local currency terms to THB 2,107.9m, due to weaker consumer sentiment and economic conditions in Thailand, following the passing away of the late King.
Commenting on the performance at Star Vegas, Mr Lim said: “Despite subdued consumer sentiment and economic climate in Thailand, the Star Vegas venue experienced only a moderate reduction in revenue, down 6.8 per cent to THB 2.9bn, supported by an increase in the VIP gross win rate, which was 3.54 per cent, up from 3.16 per cent in FY16. Pleasingly our non-gaming revenue continued to show strong growth, up 32 per cent in FY17 as management initiatives to improve utilisation of the facility were implemented.
“Some of our new junket customers will commence offering online gaming in September 2017, as new facilities are built out. In addition, we have brought in a number of professional third party operators to build new entertainment facilities, at their own cost, for our VIP guests. The new facilities include a nightclub, karaoke rooms and a new café, which are planned to open in September and will help to generate additional visitation to the property.”
The Aristo International Hotel continued to grow substantially, with the strategy to focus on mass market continuing to provide benefits to the group. EBITDA increased by 39.6 per cent in local currency terms to RMB 74.8m.
The Aristo International Hotel is located amid the misty mountains and lush greenery of Lao Cai, on the border between China and Vietnam.
Commenting on the performance at Aristo, CEO Joey Lim said: “Aristo continues to grow strongly, with impressive EBITDA growth driven by increases in both gaming and non-gaming revenue, while tight cost management resulted in outstanding NPAT growth of 130.9 per cent to RMB 31.8m. Visitor numbers continued to grow, up 18 per cent to 175k over FY17, including a new monthly record of 18,356 players in August 2016. Marketing strategies were focused on increasing lower volatility mass market play, which drove strong growth in net gaming revenue of 36 per cent, while non-gaming revenue grew 12 per cent. The average VIP gross win rate achieved of 2.28 per cent was an improvement on last year’s 2.20 per cent.
“We recorded particularly strong growth in slot machine revenues, up 62 per centfor the year to RMB14.9m. To capitalise on this growth, we added 10 new Aruze slot machines to the gaming floor in April 2017, which resulted in particularly strong growth of 238 per cent in slot machine revenue in the fourth quarter.”
Mr Lim concluded that there was a positive outlook for FY18. “Donaco anticipates that the Group will gain momentum during FY18, with activity at Star Vegas expected to increase following the conclusion of Thailand’s 12-month period of mourning in October. While VIP earnings at Star Vegas are expected to be lower in the September quarter of FY18 versus the corresponding period last year due to the transition to in-house management, the main hall and slot machine business is robust, and VIP revenues are already rebuilding well as new junket operators enter the property. We also expect to benefit from the deal with Vivo Tower, as new entertainment facilities are built out and offered to our guests, which will help to utilise the full capacity of the venue. At the Aristo, management will continue to focus on the mass market and slot machines, to further increase earnings from both the gaming and non-gaming assets.”