NagaCorp may see margin squeeze from junket commission, staff costs: MS

Following NagaCorp’s 15H1 results, in which the operator reported net profit of $101 million, up 49 percent year-on-year, Morgan Stanley says that it has concerns of margin squeeze from rising junket commission and staff costs.

Praveen Choudhary wrote in a note that taking out one-off slot income of $40 million and prior year tax expenses of $9 million, recurring EBITDA and net profit grew 7 percent and 4 percent YoY, respectively.

Mass market gross profit (excluding one-off slot income) went up 12 percent YoY to $101 million, but VIP was flat YoY at $34 million due to weaker hold. The note lists concerns such as rising junket commission, cost inflation, and higher obligation payments.

The company also announced that the NagaCity Walk opening will be delayed until 3Q16.

 

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