Profit soars 118pc for hotel casino complex
Listed entertainment conglomerate NagaCorp plans to consolidate and improve on its position in Cambodia after posting highly encouraging interim results for the first half of this year.
NagaCorp's wholly owned subsidiary NagaWorld owns, manages and operates the only world-class hotel casino entertainment complex in Phnom Penh. The company achieved what it described as a 'record-breaking' 118 per cent increase in profit for the six months ended June 30.
Revenue increased by 65 per cent to about US$111.8 million, from US$67.8 million for the same period last year.
Gross profit was up by 59 per cent, reaching US$79.9 million. Gross profit margins were 71.5 per cent for the first six months of this year compared with 74.2 per cent for the same period last year.
Earnings before interest, taxes, depreciation and amortisation (ebitda) increased by 84 per cent to US$55.5 million, from US$30.1 million for the same period last year. The ebitda margin for the first six months of this year was 50 per cent, the highest level since the group's initial public offering (IPO) in 2006, and higher than some key casinos in Macau.
Overall, NagaCorp achieved a 118 per cent increase in net profit to US$45.9 million, attributing the results to maintaining a conservative gaming policy, devising an ever-improving gaming strategy and operational efficiency.
A significant amount of the company's revenue was derived from its non-gaming operations, principally its hotel and entertainment arm.
Non-gaming revenue increased by 114 per cent to US$9.4 million for the first six months from US$4.4 million for the same period last year.
Throughout the first half of this year, NagaWorld hotel's room occupancy rate had averaged 75.2 per cent and this figure continues to rise.
NagaCorp's board has resolved to declare an interim dividend of 1.54 US cents per share (12.01 HK cents), representing a dividend payout ratio of approximately 70 per cent based on the net profit generated for the period.
Since the group's IPO in October 2006, it has maintained an average payout ratio of 65 per cent.
'We are of course extremely pleased with the results,' says Philip Lee, chief financial officer and executive director of NagaCorp.
'There has been a lot of hard work by everybody involved over the past few years, and we have gradually built up the market and now we have achieved something of a breakthrough.'
Lee attributes much of NagaCorp's successful results in Cambodia to building a niche market and this has attracted visitors from Vietnam, the mainland and Hong Kong.
In addition, the company runs special package deals, helping guests clear customs and immigration at Phnom Penh airport before boarding transport that will take them to the gaming tables in about 30 minutes.
'An additional attraction is that entertainment costs are so much lower in Phnom Penh than they are in other parts of the region,' Lee says.
Following the excellent results for the first six months of the year, NagaCorp is anticipating an even better performance for the rest of the year, he says.
'There has been a clear upward trend from year to year, with the July to December period performing best.'
NagaCorp has no plan at present to expand its operations and would rather consolidate its position.
'We are very comfortable where we are, we know the market and we know the business,' Lee says.
'We think this is just the tip of the iceberg, as official statistics from the tourism department in Cambodia have forecast that arrivals will grow by 140 per cent by 2020.
'And we think there is considerable potential in the high-end junket market.'
Lee says that NagaCorp has outperformed the competition in more prominent gaming enclaves, such as Macau and Singapore.
'We don't spend billions of dollars on facilities and we don't borrow billions of dollars,' Lee says.
'In fact, we have zero borrowing - our outlay on facilities was approximately US$170 million, so we have a very profitable bottom line.
'So we are very confident about the future, and will continue to build wisely and spend wisely.'