Union Gaming bullish on NagaCorp’s VIP bet

Jul 16, 2014 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Union Gaming Research Macau Ltd forecasts Cambodian casino operator NagaCorp Ltd will post a growth of 30 percent in VIP volume next year, as a result of the company’s investment on the segment. NagaCorp operates NagaWorld (pictured), the country’s largest casino complex and the only in capital Phnom Pehn.

Analysts Grant Govertsen and Felicity Chiang made the comments after a tour to a new VIP space located on NagaWorld’s third floor, set to open at the end of this month. The area includes two large halls, as well as 12 private rooms. A total of about 46 tables will be added to the current 83 VIP tables.

“In our view, this product is of high quality and compares very favourably to much of the existing VIP infrastructure in Macau,” they wrote in a note issued on Wednesday.

“This new space should serve as the home for Macau junket operators, as will the rooftop VIP space (another 17 tables) that should come online in early 2015. These VIP spaces will be augmented by the company’s own private air terminal, which should also come online later in 2015,” the analysts added. NagaCorp is also acquiring two larger aircraft to operate charter flights servicing routes in Greater China.

“We feel incrementally more bullish about Naga’s prospects as a result, and believe the company is likely to finalise agreements with (perhaps multiple) large Macau junkets in the near-term,” they wrote.

Union Gaming reiterated its ‘Buy’ rating on shares of NagaCorp, which is listed on the Hong Kong Stock Exchange. The research house maintained its HKD8 (US$1.03) price target for the company.

Union Gaming is currently estimating 21 percent VIP volume growth in 2014 for NagaCorp. It is forecasting 30 percent VIP volume growth for the following year, to US$7.2 billion, although it warns the estimate could be “notably conservative”.

NagaCorp has plans for a casino resort in Primorye, in the Russian Far East, its first foray outside Cambodia. Union Gaming says the company could break ground on the US$350 million project early next year. This would imply an early 2018 opening.

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