Naga 2018 profit soars, outlook seen positive

Wednesday 13th of February 2019

NagaCorp, the operator of Cambodia's NagaWorld, posted a 53 percent increase in net profit for 2018 as all business segments reported strong growth, led by VIP gaming.

Gross gaming revenue was up by 55 percent to $1.4 billion, while earnings before interest, tax, depreciation and amortization surged 60 percent to $511.8 million. Net profit was $390.6 million.

VIP rollings were particularly strong, up 69 percent to $35.7 billion, after the opening of Naga2 in late 2017. The new property offers significantly upgraded amenities.

Macau junket Suncity opened in Naga2 in March 2018 and will be moving to a “larger and more desirable” location in the first quarter of this year. The company says it expects all four of Macau’s biggest junkets to be operating out of the property this year.

“Despite the significant increase in VIP business volume, VIP customer composition remains well diversified between South East Asia and North Asia,” it said.

Mass Market table buy-ins increased by 57 percent to $1.2 billion and mass market electronic gaming machines bills-in increased by 22 percent to $2.2 billion.

Naga said the volume growth was mainly due to increased visitation from China, which saw a gain of 69 percent in the first eleven months of last year and holds strong potential for further expansion.

Union Gaming said it was increasing its price target for the company on the back of the results

“NagaCorp, which has consistently been one of our top picks, continues to beat expectations as demand remains very robust across all gaming segments and across both properties,” analyst Grant Govertsen wrote in a note.

“Naga, which was the best performing gaming stock globally in 2018, remains a top pick of ours, and we expect Naga2 to continue to ramp closer to its full potential over the course of 2019.” Union Gaming raised its PT to HK$12 (from $10) and reiterated a Buy rating.

NagaCorp said its plans for an IR in Vladivostok are progressing and it expects the project to be broadly on track for completion this year. It also reiterated it is in the advanced planning stages for Naga3 in Cambodia to take advantage of growth opportunities there.