Donaco says Vietnam property seeing strong growth, seeks acquisitions

Monday 25th of August 2014

Donaco International said VIP turnover at its new Aristo International casino in June and July was up 74 percent despite headwinds from the World Cup, tensions with China and an earthquake across the border in Yunnan.

The Australia-listed company also said its new slot business at the luxury resort had seen strong growth in the period and it was considering adding new machines.

In its full-year 2014 results presentation, Donaco said overall group revenue had surged 80 percent during the year, helped by a 33 percent contribution from Vietnam. However, the figures only represent six-weeks of operating results from the new casino resort.

VIP turnover in the year was up 67 percent, pushing up junket commissions by 69 percent, the company said. VIP net gaming revenue rose 41 percent on the back of a decline in the gross win rate to 2.78 percent from 2.98 percent.

Gross gaming revenue in Vietnam rose to $55.31 million ($51.4 million), while marketing and commissions in the country amounted to $29.48 million.

The company is focusing on the VIP market in Vietnam, but says that this is more akin to the premium mass market, at best, in Macau. It has added new junket operators who are bringing in business from Shanghai and Malaysia.

Donaco also said it stands to gain if the Vietnamese government approves a decree lifting a ban on locals in the casinos. The company said the timing and details of any such opening are still unclear, but at present the country is estimated to be losing about $800 million a year in revenue as a result of Vietnamese citizens crossing into Cambodia to gamble.

On its future plans, Donaco said it never intended to be a single property company, and is actively pursuing opportunities for further investment. It says it’s mainly looking in South East Asia and sees the potential of strong returns from boutique properties. However, it said it would also be prepared to look elsewhere should the opportunity arise.

The company has a cash balance of $98 million, not including a contribution from the spinoff of its mobile technology business iSentric.