GGRAsia – NagaCorp reassures investors over Cambodia licence

NagaCorp reassures investors over Cambodia licence

Oct 07, 2014 Newsdesk Latest News, Rest of Asia, Top of the deck

Cambodian casino operator NagaCorp Ltd has taken the step of reassuring investors about its casino licence rights in the country.

NagaCorp affirmed in a filing to the Hong Kong Stock Exchange late on Monday that the company has – via an indirect wholly-owned subsidiary called Ariston Sdn Bhd – the right granted to it by the Cambodian government to conduct casino gaming activities in Cambodia for a period of 70 years from January 2, 1995.

It stated that the deal includes an exclusive right to operate a casino (NagaWorld, pictured) in the capital Phnom Penh, and the area within a radius of 200 kilometres (124 miles) of the city, “except the Cambodia-Vietnam border area, Bokor, Kirirom Mountains and Sihanoukville”. The company added that the exclusivity right lasts until the end of 2035.

NagaCorp said it was issuing the filing because it had “noted, whether with an intention to cause trouble or not, some questions on the company’s exclusivity rights”.

Some observers have previously expressed concern that NagaCorp’s gaming rights are tied to the political fortunes of Prime Minister Hun Sen, who has been in power for more than 25 years but has recently faced a growing domestic opposition to his government.

Nonetheless, NagaCorp has been increasing its investment in the country. It is building a second phase known as Naga2, due to open in 2017, including 1,000 new hotel rooms and suites, more gaming tables and machines and convention space with a 4,000-seater theatre.

According to a report in March 2013 by Malaysia’s CIMB Research Pte Ltd, the capital cost of Naga2 was estimated at that time as US$369 million. A third phase is also planned.

NagaCorp said in its interim report for 2014, filed in mid-September, that it had engaged an independent external advisor called Political and Economic Risk Consultancy Ltd, “to assess the investment risks in Cambodia”.

In other developments, NagaCorp is to lease two Airbus A320 aircraft to a start up airline, enabling the latter to bring gamblers from China into the country, reports the Phnom Penh Post newspaper.

NagaCorp’s chairman Tim McNally in August told GGRAsia the firm planned to start in September flying Chinese VIPs to its property in Phnom Penh.

The casino company has signed more than seven VIP promoter groups from Southeast Asia, primarily from Malaysia, in recent years. But in August the company said it was ready to sign up seven or eight junket operators from Macau.

The new airline – Bassaka Air – was on Monday granted an operational certificate by the Cambodian government, said the English language Phnom Penh Post. An airline executive quoted by the media outlet said he couldn’t give a date for the start of flights, as other permits were required.

On October 3, NagaCorp reported its gross gaming revenue for the third quarter of 2014 as US$91.5 million, an increase of 23.5 percent from a year earlier.

Analysts from Credit Suisse in Hong Kong said in a note on Monday that a Macau junket called Asia Nation started contributing to NagaWorld operations from late August. The casino operator has also made an agreement with Suncity Group, one of the largest junket platforms in Macau.

NagaCorp also plans to open a US$350-million casino resort near Vladivostok in the Russian Far East. In August it said the process of obtaining all necessary permits for the construction of the project would “ be completed in about a year”. The Vladivostok project “is not expected to be operational before 2018,” it added.