Naga’s Share Price Falls as Macao Languishes

The price of shares in Cambodia’s largest casino operator, NagaCorp Ltd, have fallen sharply over the past six months due to waning investor confidence in gaming stocks and plummeting casino revenues in Macao, a gaming analyst said Tuesday.

Shares in the operator of Phnom Penh’s NagaWorld casino were trading at 5.87 Hong Kong dollars, or about $0.76, Tuesday after falling from 8.58 Hong Kong dollars, or about $1.11, in March.

Patrons walk into Phnom Penh's NagaWorld Casino on Tuesday. (Alex Consiglio/The Cambodia Daily)
Patrons walk into Phnom Penh’s NagaWorld Casino on Tuesday. (Alex Consiglio/The Cambodia Daily)

The drop comes amid campaigns in mainland China to curb excessive spending by the country’s elite, leading to less traffic and lower earnings at Macao’s casinos.

Casino revenues in the Asian gaming hub fell for the third consecutive month in August—the most severe drop in five years, according to the Las Vegas Review Journal, an industry publication.

Grant Govertson, a principal analyst at Union Gaming Research Macau, said by email Tuesday that the situation in Macao has “resulted in negative sentiment for the entire gaming sector.”

The decline in NagaCorp’s share price, Mr. Govertson said, “has very little to do with the company’s operations and its outlook. Rather, the entire gaming sector has fallen out of favor with investors.

“If you look at the shares of Hong Kong listed companies that operate in Macau, most are down 40 percent this year. Simply put, gaming stocks have temporarily fallen out of favor with the investment community,” he said.

But despite NagaCorp’s falling share price, the company has bucked the trend in Macao, with profits rising and expansions underway.

During the first six months of 2014, the company’s net profit reached $67.6 million, 8 percent higher than during the same period last year.

“We achieved these results despite the negative news and slowdown of GGR [Gross Gaming Revenue] growth in Macao,” NagaCorp said in its 2014 interim report released earlier this month.

“The company’s positive results were attributed to higher business volume from the Public Floor Tables and the successful ramp-up of VIP Gaming generated through the junket incentive program.”

NagaCorp is currently constructing Naga2, a $369-million complex in Phnom Penh, and finalizing plans to fly in VIP players from Macao and China on charter flights using Airbus A320 jets.

And, Mr. Govertson said, the company can expect further growth.

“Naga…is still experiencing notable growth in revenue and we expect it to continue to do so going forward,” he said.

“This will be driven, in part, by the company’s new efforts in the VIP segment, as well as ongoing efforts to attract more foreign visitors to Cambodia in general and Naga in specific.”

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