ASX-listed Donaco International Limited on Friday warned that any legalization of casinos in Thailand could have a significant impact on its Star Vegas casino, located in the Cambodian town of Poipet near the Thai border casino, with the company currently assessing the unwanted development.
Combined with a potentially negative tax implication following an audit of its Vietnamese operation Aristo International Hotel, located near the border with China, the headwinds overshadowed Donaco’s results announcement for the June 2024 quarter, which saw group-wide revenue grow 57% year-on-year but fall 15% sequentially to AU$10.8 million (US$7.08 million). Group EBITDA showed a similar trend, down 24% versus the March quarter to AU$6.34 million (US$4.15 million).
On the Thai casino issue, Donaco said, “In 28 March 2024, the Thailand government voted in favor of a study by a panel of lawmakers to allow casinos to operate within large entertainment complexes in the country.
“This study will be submitted to the Cabinet for a decision on the suitability of legalizing casinos in Thailand. The legalization of casinos in the country may impact Donaco’s Star Vegas operations and cross-border tourism in the region. Donaco is assessing the possible effects this development could have on the business.”
At Aristo, a recent tax audit by the Vietnam General Department Of Taxation has deemed that unredeemed chips deposited by customers must be counted as revenue, with the company facing a potential tax payment of around US$5.9 million. Donaco said it has engaged a consultant in Vietnam to lodge an appeal, with the result currently uncertain.
“While Donaco is pleased to report a strong recovery in earnings following the COVID-19 pandemic, these potential disruptors will be considered as the company navigates the evolving landscape of the gaming industry in Southeast Asia,” it said.
Donaco’s 2Q24 results were primarily impacted by the VIP gaming segment at Star Vegas, where rolling chip turnover almost halved – although final results were aided by an extraordinarily high 10.82% VIP win rate. The company explained that, variance aside, both Star Vegas and Aristo are looking more stable with strong visitation for the quarter. “Donaco has consistently reported robust financial and visitation numbers following stable quarters across our operations,” said Donaco’s Non-Executive Chairman, Porntat Amatavivadhana.
“In the period we’ve stabilized our operations and focus on providing a high-quality experience to our customers. This is evidenced by the improving average daily visitation across both Star Vegas and Aristo.
“Star Vegas recorded stabilized property-level EBITDA and net revenue figures. A higher-than-usual VIP Win Rate impacted Star Vegas; however, our turnaround strategy minimized operating expenses through a period of stronger visitation.
“Meanwhile, Aristo reported high visitation levels in line with the March Quarter and an increase in net revenue over the period. A minor surge in operating expenses impacted Aristo and, unfortunately, affected the operation’s property-level EBITDA. However, we are confident in Aristo’s long-term potential, in light of the opening of the new Sapa airport in 2025.”
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