Cambodia Investment Review

NagaCorp posts 2021 annual review

NagaCorp posts 2021 annual review

Harrison White

Hong Kong exchange-listed NagaCorp (SHKE: 3918), the company behind Phnom Penh’s exclusive casino operator NagaWorld, has posted its annual review highlighting it maintained positive earnings last year posting an adjusted EBITDA of $22.4 million.

The adjusted amount is from $15.4M being Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA), “less nonrecurring cost related to the employee mutual separation scheme during the Year”.

Total loss to shareholders was $147 million, attributed to the voluntary temporary suspension of business operations because of COVID-19 concerns since March 2021. Capital and reserves attributable to owners of the Company was listed at $1.6 billion, down from $1.7 billion in 2020.

NagaCorps 2021 Q4 report.

In a company statement it said: “Despite a longer business closure period in 2021 (about 6.5 months) as compared to 2020 (about 3.5 months), the Company witnessed a quicker recovery of business volume post the second re-opening.

The Group generated a cumulative EBITDA of $281 million where the expected average of the Company’s peers was only $19 million as per Bloomberg consensus on 25 January 2022.

From the balance sheet perspective, the Company’s net debt to equity ratio of about 16% as of 30 June 2021 was much lower than the average of the Company’s peers of 114%.

Both the Company’s superior cumulative EBITDA and gearing ratio reflected the gradual recovery of the Company’s business in a low-cost operating environment, strong execution in cost-saving and strict financial discipline of maintaining reasonable debt levels.”

Naga3 Update

Naga3 'creating more tourism' - Khmer Times
The new $3.5-billion Naga3, will have one tower which is set to become the highest point in the city.

Naga Corp is currently is the process of building its $3.5 billion ‘Naga 3’ tower. The target for commencing work has been slated for the first half of 2023 after the foundation and basements have been completed and handed over to the super-structure construction teams.

Design development work is ongoing and the contract documentation for main building work package is on schedule to be completed by 1Q2022. The target commencement of main building work package shall be first half of 2023, after the
foundation, basements and ground floor have been completed and progressively handed over to main building work contractor.

The Group added, it continues to focus on the execution of its existing development projects. The development of Naga 3 is in progress. Naga 3’s long-term strategy is the continuation of Naga 2’s success. The Company is committed to developing and completing the Naga 3 Project to stimulate and enhance Cambodia’s tourism industry.

NagaCorps 2022 outlook

The company’s flagship multi-purpose resort and casino in Phnom Penh.

NagaWorld is Phnom Penh’s only integrated hotel and entertainment complex and we enjoy a 70-year casino license that will run until 2065, as well as exclusive rights to operate casinos within a 200-km radius of Phnom Penh (except the Cambodia-Vietnam border area, Bokor, Kirirom Mountains and Sihanoukville) that expires in 2045.

“Given the uniqueness of a casino monopoly in the heart of a capital city, the combined complex of NagaWorld is expected to position the Group as one of the most sizable riverine integrated resorts and entertainment centers in the Asia Pacific region.

Global economic conditions are expected to continue recovering with the progressive rollout of vaccination programs and booster shots. With the reopening of the Cambodian economy, domestic economic activity, including retail and wholesale, transportation, and domestic tourism is expected to increase steadily, while the international tourism, hotel and restaurant sector may recover more gradually.

According to Fitch Ratings, the tourism sector is expected to rebound faster than business travel in the Asia Pacific region in 2022 in view of the improvement on the business operating environment.

The ramping up of vaccines and availability of booster shots are likely paving the way of a return to normalcy in most Asian countries. Looking forward, 2022 will remain challenging amid the fluidity of the COVID-19 situation and economic uncertainties.

Nevertheless, with the easing of restrictions and the global economic recovery in sight, NagaWorld is expected to continue drawing tourists from South East Asia and East Asia, especially with incoming business migration inflows to Cambodia.

The Company expects to continue its current growth recovery in a COVID-19 endemic world, and believes that the long-term business prospects and outlook of the Group will remain stable.”

Ongoing strikes and low share price 

Naga World stock and Nagacorp
Naga World protetors outside the casino front entrance on December 30, 2021 (Source: CCHR Cambodia)

Cambodia Investment Review has previously reported the company’s stock price has fallen 35% to HKD 6.41 over 12 months as continuing COVID concerns and escalating local labor disputes impact operations.

NagaCorp’s investor relations has yet to respond directly to the protestors after the company made redundant over 1,300 staff in April last year.

The mass layoffs accounted for approximately 16% of the local workforce with accusations from certain groups that it has unfairly targeted union members.

NagaCorp was founded in 1995 by Tan Sri Dr Chen Lip Keong. The Company owns and operates the largest integrated gaming and entertainment resort in the Mekong Region.

NagaCorp filed for its initial public offering on the Hong Kong Stock Exchange in 2006, making it the first gaming company listed on the HKSE and the first Cambodia-based company listed on a foreign stock exchange.

As of posting the Naga Corp was trading at HKD 6.63 a share.

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