Casino Operator NagaCorp Back in Black despite Ongoing Strike at NagaWorld in Cambodia

NagaCorp is seeing green as it leaves red and enters black. As a result, the casino operator behind Cambodia’s NagaWorld casino was able to report a profit for the first half of 2022.

NagaCorp’s NagaWorld casino in Cambodia. The gaming operator saw positive revenue in the first half of the year following a significant decline in 2021. (Image: Nikkei Asia)

NagaCorp provided a financial health update to the Hong Kong Stock Exchange on Monday. In it, an increase of 86.3% in revenue across the group’s operations resulted in revenue of $243 million. As a result, the company reported a profit of $52.7 million between January and June.

This is compared to the US$77.2-million revenue loss in the first half of last year. At the time, NagaWorld closed or reduced operations several times due to COVID-19.

Dividends Back on the Table

2022 first-half group earnings before interest, taxation, depreciation and amortization (EBITDA) were $130.1 million. This is a substantial improvement over the $4.5 million in the first six months of 2021.

NagaCorp said that recovery from the negative effects of the pandemic was continuing during the reporting period. The company also highlighted a net profit improvement of 39.4% for the second quarter of the year. This was the result of higher business volumes in all business segments as well as continued cost control.

Average daily business volumes in the premium and gaming mass markets in the second quarter had already recovered to 80.3% and 71.8%, respectively, of the volumes for all of 2019. This was NagaCorp’s most successful year prior to COVID-19.

As a result of the improved performance, shareholders might now be able to expect a dividend of sorts. NagaCorp said in its filing that it would propose an interim dividend of $0.0073 per share. However, the company is only willing to offer scrip shares, shares offered in lieu of cash dividends.

NagaCorp stated that a scrip payout would be beneficial to its shareholders. In addition, issuing scrip shares would allow the firm to “conserve cash flow,” as well as improve its trading liquidity. Last year, shareholders didn’t receive dividends due to the COVID-19 pandemic.

NagaWorld Gains, But Faces Challenges

Through NagaWorld, the company holds a long-term monopoly casino license for Phnom Penh, the capital city of Cambodia. It stated that the first half performance was a result of the “sizable captive domestic expatriate community” in the city.

The casino is still dealing with an ongoing strike that has put it on the international stage. Allegations of government abuse of power, as well as physical abuse of employees, garnered the attention of the United Nations in March.

The strike began last December. As it enters its eighth month, tensions continue to flare. Three weeks ago, a clash between police and strikers led to 10 workers receiving injuries. The strike centers on what the employees assert is unfair treatment of former employees at the casino, as well as the company’s refusal to pay proper compensation.

NagaWorld also had its eye on a new integrated resort in Russia’s Far East, which was going to inject substantial revenue into the company. However, it has since changed its mind due to Russia’s illegal invasion of Ukraine.

Despite the NagaWorld troubles, NagaCorp’s gross gaming revenue (GGR) from casino operations was $237.4 million for the first half of the year. This was a significant improvement on the $129.3 million for the same period in 2021.

GGR for VIP markets in 2022 fell 72.1% to $17.2 million in the first half. In addition, mass-market table GGR rose 245.8% to $103.3 million, while premium-market table GGR increased more than threefold to US$61.3million in the most recent reporting period. In addition, the revenue from electronic table games operations grew 193.0% year on year to $55.5 million.

NagaCorp stated that its combined cash and deposits are growing, as well. The amount increased from $125.1 million as of December 31, 2021, to $212.9 million at the end of June.

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