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Naga Corp profit rebounds in H1’22 as mass market volume hits 80% of pre-covid levels

Harrison White

Naga Corp (SHKE: 3918) the Hong Kong-listed operator of Phnom Penh casino complex Naga World has reported a net profit of $52.7 million after its net loss of $77.2 million in the corresponding period of 2021.

According to the company’s interim report, strong results were achieved due to the continuing pandemic recovery resulting in higher business volumes across all business segments with Gross Gaming Revenue at $237.4 million.

Average daily business volumes for the Mass Market and Premium Mass Market this year have already recovered to 80% and 71% respectively of the average daily business volumes in the peak pre-COVID-19 year of 2019.

In 2021, the company reported a total loss to shareholders of $147 million, attributed to the voluntary temporary suspension of business operations because of COVID-19 concerns from March to October that year.

To read more about Naga Corps 2021 annual results click here.

Investors are slowly returning to the company’s stock which has not yet recovered to its high of over HKD 14 in mid-2019, currently trading at around HKD 7 from a low of just over HKD in August 2021.

The company also kept low outgoings with administrative and other operating at $62.9 million during the first half of 2022, representing a decrease of $3 million or 5% year-on-year.

This was mainly attributed to the controversial layoffs of approximately 16% of the workforce which resulted in mass protests outside the casino in Phnom Penh earlier this year.

Preparing for a ‘deepening recessional environment’

The company stated it was in a good position for the looming economic headwinds cautioning of a deepening recessional environment.

“Barring unforeseen circumstances, we believe that Naga Corp, and together with its subsidiaries is a growth stock in a possibly deepening recessional environment,” the company’s interim report stated.

It added customers were very much localized with the majority of them mainly from business migration and in recent years from neighboring countries plus a small group of leisure travelers during the period.

“When the respective international markets allowed travels plus a growing number of wealthy locals in search of escapism because of the favorable political, economic, and social environment in a nation which is slowly getting richer,” it said.

To read more about Cambodia’s economic outlook click here.

The group has also boosted its cash and deposits increasing from $125.1 million in December 2021 to $212.9 million as of June 2022 attributed to the continued recovery of business volumes and prudent cash management.

NagaWorld is Phnom Penh’s only integrated hotel and entertainment complex and has 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.

Chinese Malaysian businessman Chen Lip Keong is the founder and majority shareholder of Naga Corp.

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