Donaco International CEO Joey Lim says the company is anticipating significant revenue growth in the fourth quarter of the year due to the impending arrival of additional Thai junket operators and the launch of new entertainment facilities at its flagship Star Vegas property, including a nightclub, karaoke rooms and new café.
The regional casino operator announced its FY17 results on Tuesday, with profit after tax falling 60.6% to AU$31 million due in part to “non-recurring items of negative $23.6 million, including a final vendor management fee,” with management now being conducted in-house. Underlying Group EBITDA fell slightly to AU$84.4 million from AU$87.9 million in FY16.
However, underlying net profit after tax remained stagnant at AU$54 million, with group revenue falling slightly to AU$136.4 million from AU$143.4 million 12 months ago due primarily to the impact on Star Vegas of the mourning period for the death of the King of Thailand.
Star Vegas, located on Cambodia’s border with Thailand, saw revenue fall 6.8% to AU$110.2 million, but Mr Lim pointed to the signing of deals with junket provider Vivo Tower as well as Poker King Club, the Asian Poker Tour and English Premier League giant Manchester United as providing significant uptick moving forward.
“Star Vegas is a world class gaming and entertainment property and having transitioned to full management control, we have additional flexibility to implement initiatives to increase visitation and performance,” he said. “We are now able to expand our reach to attract new sets of international customers and are excited about the prospect of holding additional VIP events, following the recent successful South-East Asian leg of the Asian Poker Tour.
“We have also made good progress in signing up additional junket operators, with new customers joining us during August 2017 and further deals signed for more junkets to commence in September 2017. The main hall and slot machine business has remained robust during the transition period, and the VIP business is rebuilding well.
“Some of our new junket customers will commence offering online gaming in September 2017, as new facilities are built out. In addition, we have brought in a number of professional third party operators to build new entertainment facilities, at their own cost, for our VIP guests. The new facilities include a nightclub, karaoke rooms and a new café, which are planned to open in September and will help to generate additional visitation to the property.”
Donaco’s smaller Aristo International Hotel, located on the border with China, enjoyed strong growth with net gaming revenue up 36.3% to AU$15.2 million and EBITDA up 39.6% to AU$14.2 million. Property level NPAT rose 130.9% to AU$6.1 million.
The company has also announced a new dividend policy of paying out 10 to 30% of net profit after tax in the form of dividends and implementing half-yearly dividend payments. It will pay a final dividend of AU$0.5 cents per share unfranked on 20 October 2017.
“Donaco anticipates that the group will gain momentum during FY18, with activity at Star Vegas expected to increase following the conclusion of Thailand’s 12-month period of mourning in October,” Mr Lim said.
“While VIP earnings at Star Vegas are expected to be lower in the September quarter of FY18 versus the corresponding period last year due to the transition to in-house management, the main hall and slot machine business is robust and VIP revenues are already rebuilding well as new junket operators enter the property.
“We also expect to benefit from the deal with Vivo Tower, as new entertainment facilities are built out and offered to our guests, which will help to utilize the full capacity of the venue. At the Aristo, management will continue to focus on the mass market and slot machines, to further increase earnings from both the gaming and non-gaming assets.
“Our announcement of a new dividend policy, and a regular dividend program, along with the planned share buy back, are all testament to the sustainable cash flow that Donaco generates and our commitment to building shareholder value.”
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