The recent closure of Cambodia integrated resort NagaWorld is not likely to last much longer, while strong expat demand should ensure a swift recovery once operations recommence, according to brokerage Union Gaming.
In a research report published Wednesday a day after operator NagaCorp issued its 4Q20 financial results, Union Gaming analyst John DeCree said the outlook was broadly positive for NagaWorld despite having last week suspended operations due to an outbreak of COVID-19.
As reported by Inside Asian Gaming, NagaWorld closed its doors on 1 March after mass testing of 3,000 employees returned 11 positive results.
“While the length of the closure is uncertain, we do not expect it to be anything like the multi-month closure in 2020,” said DeCree, pointing to NagaWorld’s’ three-month closure stretching from April to June of last year.
“The quarantine period in Cambodia is two weeks, but we suspect it could take a little longer to reopen out of an abundance of caution.
“Like the previous reopening, we suspect pent-up demand will return quickly when operations resume. Looking ahead, Cambodia received nearly 1 million vaccines so far, which should go a long way in combating the pandemic and helping to open up some international travel.”
NagaCorp this week declared that it would pay out 100% of its 2H20 profit in dividends to shareholders in what DeCree described as a “strong signal of management’s confidence in the near-term recovery and long-term growth trajectory of the business.
Union Gaming has revised down its price target for Naga shares from HK$13.50 to HK$12.50 (currently priced at HK$9.94 as of close on Wednesday) due to the current closure. However, DeCree noted that NagaCorp “is uniquely positioned for a continued strong recovery with a deep local market and a large barrier to entry with its exclusivity in Phnom Penh, coupled with a robust long-term growth profile supported by continued organic economic growth in Cambodia and the planned Naga 3 development.”
NagaCorp this week reported a profit of US$102 million for FY20, with mass gaming revenue having recovered to 95% of pre-COVID levels by the end of the year.
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