Tue, Oct 22, 2:05pm by Noah Taylor
Australia-listed Donaco International released a three-month trading update for the period ending September 30, where the firm has said its results showed “a very significant improvement” from last year.
Inkedin.com reports the Asian casino operator Donaco International Ltd says it has turned a profit in the third quarter of 2019, where group revenue increased by 42.3 percent year-on-year to AU$24.25 million (US$ 16.6 million) and profits nearly tripled to AU$8.9 million with net profit after tax hitting AU$3.8 million compared to a loss of AU$1.76 million in Q3 2018.
Donaco has credited the turnaround with increased revenue, especially at its Aristo International Hotel property in northern Vietnam stricter cost controls, which include “the departure of unprofitable junkets” at Donaco’s main casino, Star Vegas in Poipet, Cambodia.
Star Vegas new CEO Paul Arbuckle, who took the helm in June, oversaw the revaluation of the junket. In response to vocal investor concerns about the company’s position, Donaco has revamped its board of directors, which follows the ousting of brothers Joey and Ben Lim in July.
The “rationalisation” of the Star Vegas junket arrangements resulted in the VIP turnover of the estate falling to 39% to THB12.1b (US$ 400 m). Despite this being the case, the VIP win rate soared to 3.55 percent over a full point, helping boost net income of the property to THB358 m by nearly 3 percent. Earnings for the business rose to THB128.2 m by 6.7 percent.
Donaco International Returns to Profitability https://t.co/OwOBoNsOg7
— RS_Moedjito (@RS_Moedjito) October 20, 2019
The casino and hotel complex is located in Poipet, Cambodia on the border with Thailand. Established in 1999, Star Vegas is the largest and highest quality of the Poipet casino hotels. The property has over 150 gaming tables, more than 1000 slot machines and 385 hotel rooms.
The increased financial returns at Star Vegas have been terrific for the organisation however from a patronage standpoint, the resort hasn’t seen growth this quarter. Average daily visitors dropped nearly 16 percent due to what the company claimed was “increased competition in the Poipet area”.
The update provided by Donaco’s didn’t mention Star Vegas’ online gambling operations, which started last August following years of delay.
It appears their online gambling operation may appear to be living on borrowed time after the August announcement by the Cambodian government that no new online licenses would be given and existing licensees would be forced to complete their operations by the end of the year.
The flagship business for Donaco is the Aristo International Hotel, a successful boutique casino in northern Vietnam, which is located on the border with Yunnan Province, China.
The property posted a $247.2 m rise in VIP turnover from just $7.7 m in Q3 2018 and in addition, saw a 40% increase in daily attendance, helping push the property’s revenue from $3.1 m up to $5 m. Business earnings saw a significant increase from just $190k to $3 m.
Established in 2002, the property is five star resort complex with 400 hotel rooms, multiple gaming tables, and a licence allowing up to 300 electronic gaming machines. Donaco is a pioneer casino operator in Vietnam where it owns a 95% interest in the business in a joint venture with the Vietnam Government.
In recent times, headlines relating to Donaco have been centered on legal disputes surrounding Star Vegas, including the long-running battle with a Thai consortium employed by Donaco to manage the nearby Star Paradise casino’s gaming operations. The news of the increased profitability for the firm is a positive sign for the group despite such challenges.
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