GGRAsia – Vietnam’s casino market worth up to US$1.2 bln: analyst

Vietnam’s casino market worth up to US$1.2 bln: analyst

Aug 09, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck

Vietnam’s gaming market is “likely larger than most expectations”, with nearly 30 gaming facilities currently operating in that country, says Union Gaming Securities Asia Ltd. These venues range from small slot parlours in 5-star hotels to the Grand Ho Tram casino resort on the southern coast of Vietnam, the brokerage added.

“We tallied nearly 400 gaming tables and more than 3,000 slot/ETG [electronic table games] seats,” said analyst Grant Govertsen in a note on Wednesday.

While the Vietnamese government does not disclose gross gaming revenue (GGR) data from the existing gaming venues, Union Gaming estimates that nationwide GGR currently stands in the range of US$800 million to US$1.2 billion. The estimate is based on information released by three publicly traded companies with exposure to Vietnam’s gaming market, “as well as via conversations” with operators in that market, said the brokerage.

According to Union Gaming, at least three casino resorts are currently under construction in Vietnam, “with at least one more waiting for government approval”. The schemes currently under construction are located respectively: in the Van Don Special Economic Zone, it the north of the country; in Phu Quoc Island, in the south; and in Hoi An, in the central coastal area.

The Van Don project is being developed by Vietnam’s Sun Group. It is located in a remote area around 160 kilometres (99.4 miles) east of Hanoi. The Phu Quoc casino is promoted also by a Vietnamese firm, called Vingroup.

The Hoi An casino property is being promoted by Hoi An South Development Ltd, a venture that involves an entity connected to Macau junket investor Suncity Group, Vietnam-based asset management firm VinaCapital Group and a subsidiary of Hong Kong-based Chow Tai Fook Enterprises Ltd.

In addition, U.S.-based casino operator and hospitality business Hard Rock International Inc is pursuing a licence to develop a casino at Laguna Lăng Cô beach resort, in Vietnam’s Thua Thien Hue province. A senior executive told GGRAsia last month that the company is willing to begin construction as soon as the national government nods the casino licence.

Local-gambler trial

According to Union Gaming, the casino schemes in Phu Quoc and Van Don “are guaranteed” – once completed – to be part in a local-gambler trial in Vietnam.

The Vietnamese government published in January a decree that paves the way for selected domestic casinos to accept bets from Vietnamese gamblers, for a trial three-year period.

“Details are still quite murky as to the respective scope and timing of the respective IRs [integrated resorts] in each of these locations [Phu Quoc and Van Don], suffice to say that they have been awarded to local Vietnamese property developers with no gaming experience,” said Mr Govertsen. “Neither of these locations are easily accessible from the major population and wealth centres of Hanoi and Ho Chi Minh City,” he added.

The brokerage noted that other casino projects that meet the minimum capital expenditure requirement of US$2 billion could also apply to be included in the local-gambler trial – that would include the project involving Suncity Group.

Hong Kong-listed Suncity Group Holdings Ltd said last month that it will acquire a 34-percent stake in the Hoi An casino project for a total consideration of HKD600 million (US$76.8 million). Suncity Group Holdings does not currently contain any gaming-related assets or any of the Macau junket-related businesses of privately-held Suncity Group.

Suncity Group Holdings and Suncity Group are both controlled by Macau junket investor Alvin Chau Cheok Wa.

“The acquisition of a 34-percent stake in the Hoi An IR project (pending shareholder approval) for HKD600 million and related management contract should be transformational for the company [Suncity Group Holdings],” said the Union Gaming analyst.

According to the brokerage, the first phase of the Vietnam project is expected to cost US$650 million. Suncity Group Holdings had previously said that it anticipates the first phase “to be completed on or before mid-2019”.

“Given that the net Phase 1 project cost should be significantly lower than US$650 million when considering residential sales, and given Suncity’s expansive VIP connections, we would expect the project could achieve a decent return on investment even under the current foreigners-only construct,” said Mr Govertsen.

In a recent interview with GGRAsia, Andrew Lo Kai Bong, one of the executive directors of Suncity Group Holdings, said the Hoi An project developer would apply to be part of the local-gambler trial in Vietnam.