NagaWorld shutdown unlikely multi-month: Union Gaming

NagaWorld shutdown unlikely multi-month: Union Gaming

Brokerage Union Gaming Securities LLC says it does not expect the recent precautionary shutdown of operations at Cambodian casino complex NagaWorld (pictured), due to Covid-19 infections, to be “anything like” the “multi-month closure” of that casino market seen last year.

“The quarantine period in Cambodia is two weeks, but we suspect it could take a little longer to reopen out of an abundance of caution,” said a Tuesday note from analyst John DeCree, referring to the Phnom Penh operation of Hong Kong-listed NagaCorp Ltd.

The casino group had said in a March 1 filing to the Hong Kong bourse, that business at NagaWorld had been “voluntarily” suspended after 11 employees tested positive for Covid-19 amid screening of 3,000 workers.

Last year, all casinos in Cambodia were ordered to shut down temporarily with effect from April 1, as part of a number of measures to prevent the further spread of the pandemic domestically.

NagaCorp had been permitted to reopen its VIP gambling tables and slot machines operation on July 8, subject to introducing a set of Covid-19 countermeasures. The firm announced on July 19 it had also been allowed to reopen its mass-market gaming tables.

Mr DeCree observed in his Tuesday memo: “Like the previous reopening, we suspect pent-up demand will return quickly when operations resume.”

On Monday NagaCorp reported 2020 net profit of just above US$102.3 million, supported by a “satisfactory” recovery in the second half of the year. Such profit was down 80.4 percent compared with nearly US$521.3 million in 2019.

Union Gaming also observed in its Tuesday commentary: “The large expatriate community in Phnom Penh continues to be the key customer demographic in the recovery, though there have been some improvements in international play mostly from business travellers, with about 40 direct international flights now arriving in Cambodia.”

Mr DeCree added: “The Cambodian Ministry of Tourism (MOT) is working on a plan to establish a tightly-secured travel bubble with China, Japan, and South Korea, that would further help improve international tourism.”

The analyst suggested NagaWorld was less dependent on gamblers from mainland China than some Asia-Pacific casino operators.

That, combined with Cambodia-China diplomatic relations being in a “very good place” made the brokerage “less concerned” than it might otherwise be, “about any potential fallout from China’s crackdown on outbound capital flows and gambling activities”.

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