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Vietnam – Donaco enjoys first EBITDA positive quarter since H1 2021

By - 31 October 2022

Cambodian and Vietnamese operator Donaco International generated Group net revenues of $4.5m and EBITDA of $1.5m for its September quarter, underpinned by the successfully reopening of Star Vegas and continued prudent cost control at Aristo.

The result marks Donaco’s first EBITDA positive quarter since the first half of 2021, with this momentum expected to grow in the current quarter and beyond. Star Vegas achieved EBITDA of $2.2m for the September quarter and the operation is anticipated to gradually reach full capacity over the coming quarter

The operator stated: “Donaco’s strong operational base has positioned the Company to swiftly capitalise on improving tourism conditions in the regions it operates, in line with the impacts of COVID-19 ameliorating. During the September quarter, this was particularly evident at the Star Vegas Resort & Club (Star Vegas) in Cambodia. Star Vegas resumed operations on 18 June 2022 following the Government of Cambodia lifting the temporary closure of casinos in the Banteay Meanchey province, where Star Vegas is located. The casino had been closed from 27 April 2021.”

Operations at Star Vegas originally recommenced on a limited scale and progressively ramped up throughout the September quarter, with a view to achieve full operational capability over the coming quarters. Star Vegas subsequently generated net revenue of A$4.10m, up from A$0.05m in the September quarter of 2021: and EBITDA of A$2.22m.

The Aristo International Hotel in Vietnam operated on a limited basis during the September quarter, as it has done so since 8 May 2020. This is because travel between Vietnam and China, which is the country from where the vast majority of Aristo’s patrons originate from, remained heavily restricted during the period due to residual COVID-19 measures.

Donaco continued its cost control strategy at Aristo to minimise cash burn, whilst also ensuring the operation has the adequate capability to ramp up efficiently, with tourism conditions between the two countries expected to improve gradually and consistently moving forward.

As a result, Aristo delivered net revenue of A$0.43m, up from A$0.71m in the September quarter from 2021 and EBITDA of negative A$0.09m.

As Star Vegas continues to ramp up towards full operation capability, Donaco is targeting further earnings
growth in the near and longer term. Additionally, Donaco is seeing an increasingly positive external environment for its Star Vegas operation, which is located next to the Thai border, with both the Government of Cambodia and the Government of Thailand implementing initiatives to increase travel flows between the two countries. For example, late in the September quarter, the Cambodian and Thai Governments agreed to speed up the reopening of the last three border crossings that remain closed between the two countries.

The company also maintains a positive long-term outlook for Aristo. While the tourism activity rebound in Vietnam near the China border is expected to be more gradual, in a highly positive move late in the quarter the Chinese government agreed to expand trade and tourism flow with Vietnam.

Donaco’s Non-Executive Chairman, Mr Porntat Amatavivadhana, commented: “I am delighted to see Donaco achieve positive EBITDA for the first time in a quarter since early 2021 and importantly there is substantial further growth potential on the horizon. Star Vegas has delivered a strong result so soon after reopening, which is a testament to the operational strategy Donaco has implemented and one which we anticipate will be sustainable. We are confident of being able to replicate this strategy at Aristo in the future, which currently remains open on a limited basis.

“As travel patterns in the region continue to improve, in tandem with the incoming Sapa Airport and Aristo’s status as the only 5-star hotel in the Lao Cai province, the long-term future for this operation is very bright. Backed by a robust balance sheet position, Donaco is poised to build on this momentum in the coming quarters,” he added.

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