Donaco International Ltd, an operator of border casinos in Southeast Asia, confirmed in a Friday filing that the quarter ending December 31 had seen the company return to positive earnings before interest, taxation, depreciation and amortisation (EBITDA), mainly driven by results from its Cambodia resort.
Star Vegas Resort and Club (pictured in a file photo) in Poipet, near Cambodia’s border with Thailand, a country where casino gambling is prohibited, generated positive EBITDA amounting to AUD3.70 million (US$2.83 million) in the period, Donaco told the Australian Securities Exchange.
That figure was offset by AUD0.13 million in negative EBITDA for the group’s Aristo International Hotel and its associated casino, in Lao Cai on Vietnam’s border with China.
It meant, on a net basis, positive EBITDA of AUD3.57 million for the group in the relevant quarter.
Star Vegas was closed temporarily from April 1, as part of Cambodia’s Covid-19 countermeasures. It reopened on September 25.
Aristo International had a shutdown from April 1, in line with Vietnam’s efforts regarding the pandemic. The property reopened in mid-May.
“We are extremely encouraged that since the casinos’ limited reopening, Star Vegas is no longer making a loss and the outlook for Aristo is increasingly positive,” said chairman Porntat Amatavivadhana, installed in August as non-executive director, after a settlement between the company and the original Thai vendors of Star Vegas. That settlement was declared “formally concluded” earlier this month.
The firm said in its Friday update that the “Star Vegas settlement” had resulted in Donaco recording, on a non-cash basis, “other income” amounting to AUD52.6 million, or US$38 million, which would be reflected in the group’s accounts for the half-year ending December 31.
Nonetheless Donaco said that quarterly revenue to December 31 was down 64.2 percent year-on-year, i.e., AUD6.0 million compared to AUD16.8 million, “as a result of Covid-19”.
Cost cuts, new markets
The company said in other commentary in the filing that, to “weather the impact from the pandemic”, a number of “strategic initiatives” had been executed by the “new board and executive team”.
These included “a shift in customer targeting, with a renewed focus on attracting clientele from the local region to Star Vegas, to in turn reduce international staff expenses,” the firm said, without giving specifics.
Star Vegas had been known for serving Thai customers, and has been documented in previous filings as having offered customers bets in Thai baht. During the pandemic, a number of restrictions on cross-border trade and travel between Cambodia and Thailand has been periodically applied.
Donaco said in its Friday update it had also been applying “continued cost-control”, including “the adjustment of service-provider agreements, restructuring arrangements with gaming-machine and junket operators, and the introduction of retail outlets”.
The chairman stated in his remarks: “Our strategy is bearing results”.
He added: “We are also experiencing a gradual easing of Covid-19 restrictions across Southeast Asia and the situation is expected to ameliorate.”
The update said fourth-quarter rolling chip VIP turnover at Star Vegas was AUD132.75 million, down 71.3 percent on the AUD462.41 million in the same quarter a year earlier.
Net revenue at the Poipet operation slipped 59.1 percent year-on-year in the December quarter, to AUD5.57 million, from AUD13.62 million.
Operating expenses at the Cambodia property were cut by 79.2 percent year-on-year in the three months to December 31, to AUD1.86 million, versus AUD8.93 million a year earlier.
The average daily visitor volume for Star Vegas in the December quarter was 368 visitors, down nearly 90 percent from the 3,646 daily-average in the December-quarter 2019.
Donaco noted in its update that as of December 31, the group’s loan debt owed to Taiwan’s Mega International Commercial Bank Co Ltd had decreased by AUD6.5 million.
“The outstanding debt of AUD10.1 million… is a significant reduction from the initially-borrowed amount of AUD129.8 million… and the company anticipates repaying the remaining debt in financial year 2021,” said the casino company.