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Cambodian casino operator NagaCorp pins down growth plans

New Phnom Penh complex will more than double gaming capacity amid VIP bet surge

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Security stands guard in front of NagaWorld casino in central Phnom Penh.   © Reuters

HONG KONG -- Cambodian casino operator NagaCorp plans to open its new Phnom Penh gaming floor in October, capitalizing on a surge in high-roller betting.

The Naga2 complex will include more gambling machines and fewer hotel rooms than previously indicated. Company officials said Tuesday in Hong Kong, where NagaCorp is listed, that the complex will feature at least 100 VIP tables, 200 or more public tables, at least 2,500 gambling machines and 850 rooms, though the new capacity may be phased in over 6-12 months.

"We are pushing hard to bring in new business," said Philip Lee, chief financial officer.

The company's existing NagaWorld complex has 239 tables and 1,660 machines. Company officials previously said the new phase would have up to 300 tables and 500 machines and 1,000 guest rooms.

Chief Executive Chen Lip Keong has disclosed plans to convert $369 million in bonds, issued to him by his company in exchange for transferring his ownership of Naga2 and the adjoining NagaCity Walk duty-free shopping center which opened last year, into NagaCorp shares. Under the revised terms of the conversion announced June 23, Chen's NagaCorp stake would rise to 65.4% from 39%.

In the first half of the year, NagaWorld's gross revenue from high rollers soared 89% to $210.5 million from a year earlier. Company officials credited the rise to growth in Chinese visitation to Phnom Penh, particularly business trips related to China's Belt and Road Initiative. Chairman Timothy McNally said that Chinese now account for about one-fifth of visitors to the Naga complex.

NagaCorp's gross profit margin on its VIP business narrowed to 27% from 31% a year earlier. Lee described this as the result of arrangements with junket agents under which they have taken on more collection risk in return for a greater cut of betting proceeds. The company raised its provision for uncollectable debt to $1.7 million from $800,000 a year earlier, but Lee said the amount was still very low.

Overall profit rose 20% to $150.6 million as total revenues rose 39% to $401.6 million. The bulk of NagaCorp's profit, though the minority of its revenue, comes from its mass market business, where its gross profit margin has been 98%. NagaCorp shares closed up 3% at HK$4.46 on Tuesday, following the release of the figures the night before.

Company officials played down the likely impact of Vietnam's move to allow its citizens to gamble at two upcoming casinos in a new test policy. "Frankly, it will have a much bigger impact on the border casinos than ours," McNally said, referring to the many smaller gaming houses along the frontier between the two nations.

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