By Ben Blaschke
NagaCorp Chairman Tim McNally has confirmed that the company’s new US$369 million Naga2 property will open for business in October, although VIP operations are unlikely to begin until 2018.
Speaking exclusively to Inside Asian Gaming after NagaCorp’s strong 1H17 earnings results were announced this week, Mr McNally said an exact date was yet to be decided upon but added “it will be October” and that “it won’t be a soft opening either.”
“There will be a ramping up over a period of time,” he said. “Whether it be some hotel rooms or some restaurants, everything will be put into place over the course of a year, but at the end of the day we’re going to begin to conduct gaming business, we’ll have hotel rooms, our lobby and food operations will all be ready when we open in October. We’ll be adding pieces over the next year so the totality of operations will take 12 to 16 months.”
When fully operational, Naga2 – accessible from NagaWorld via the US$94 million CityWalk which opened last August – will boast 200 gaming tables, 1,000 slot machines, 38 private gaming suites, 850 hotel rooms and 14 restaurants as well as a number of bars and nightclubs.
Despite the expected 12-month wait for all of those facilities to be in place, Mr McNally denied Naga2’s opening would mirror the likes of Saipan’s Imperial Pacific Resort which offered the bare minimum upon its soft opening earlier this year.
“It will be a little bit more than that,” he said. “We’ll have most of our gaming operations ready. We’re not in a situation yet to move all of our junket operations over but our mass gaming area will be open as will our hotel operations.”
Asked about Naga2’s mass versus VIP mix, Mr McNally said the property would have a clear VIP bent. He also confirmed that NagaCorp was looking at bringing in Macau junket operators.
“We don’t have any of those Macau groups maintain rooms (at NagaWorld) but Naga2 is different, we’re building a lot of nice properties and we’re hoping to have the presence of those Macau groups,” he said.
“We’re going to have more than half of [Naga2] as VIP space within our new facilities and that’s really tied to the origins of the country. In 1995, when it started as a barge operation on the Mekong River, it was purely a junket business at that point.”
NagaCorp announced better than expected earnings results this week, with revenue up 39% to US US$401.6 million and profit rising 20% to US$150.6 million on the back of a 71% jump in VIP roll and increased Chinese tourism.
Mr McNally said prospects moving forward were also positive given the amount of new infrastructure being built nearby.
“If you look at any photos right now of Naga 1 and 2, all you’ll see in the background is new hotels,” he said. “Shangri-La is going up immediately behind us, there are another half-a-dozen new offices and private property complexes, a bridge and there are plans right across from Naga to build two of the tallest towers in Asia.
“The point is that we have generated a lot of investment into the area and those people will need places to entertain. We’ve built that foundation.”
NagaCorp’s results saw brokerage Union Gaming raise its 2017 EBITDA estimates from US$274 million to US$284 million and 2018 estimates from US$387 million to US$392 million.
“While current business volumes would suggest our estimates are going to be light, we think it is prudent to build in some cushion in order to allow Naga2 time to ramp to steady-state operations as we expect margins to temporarily take a hit,” said Union Gaming analyst Grant Govertsen. “With much of the non-operating issues now in the rear view, investors can once again focus on operations, which remain stellar.”
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