Hong Kong-listed Summit Ascent Holdings will continue to reap the rewards of its Tigre de Cristal Integrated Resort in the Russian port city of Vladivostok for at least the next two years on the back of surging VIP growth.
That’s the opinion of Union Gaming’s Grant Govertsen after Summit Ascent reported VIP volume increases of more than 200% in 2H16 and 160% in 1H17.
In a weekend note, Govertsen said the future outlook was strong, with NagaCorp’s own Vladivostok project not expected to open until late 2019 and local regulations providing better access for Chinese tourists.
“An upcoming online visa application system (1 August) should help drive volume,” the Union Gaming analyst said. “Ultimately, we like the odds of a jurisdiction that is friendly with China to enjoy the benefits of outbound Chinese tourism (opposite of what Korea is currently experiencing) which, when combined with access to the under-penetrated northeast of China, makes for a compelling long-term growth story.
“The government has already opened a new highway that allows access to the casino zone from the airport within 15 minutes. Up next is the implementation of the online visa application system that goes live in three weeks, which will make it much easier for Chinese to obtain individual visas.
“Further down the road we look for visa-free access to Vladivostok. Management is separately lobbying the government to implement banking-related changes that will allow them to exchange foreign currencies at the cage, replacing the current expensive and cumbersome process for foreign mass market visitors.”
Mass growth at Tigre de Cristal has been slower due to a number of illegal casinos operating across the city, with Govertsen suggesting a potential tripling of the mass segment if authorities were to improve enforcement.
However, Summit Ascent can expect to maintain their monopoly for at least two more years.
“This is an enviable runway as it allows the company to effectively lockup the locals market in the meantime,” Govertsen said. “Ultimately we do think scale will be beneficial and expect the cluster-effect of multiple casinos to have a positive impact on market-wide VIP GGR.”
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