This Cambodian casino company is tapping into Asia’s fast-growing appetite for gaming. Here are four reasons why it’s set to keep growing.
It’s not widely known but Cambodia is expected to become one of Southeast Asia’s fastest-growing economies over the next several years. International Monetary Fund (IMF) estimates impressive GDP growth of 6.8% in 2019 and 6.7% in 2020. So what’s driving this? A large part of what’s supporting Cambodia’s economy is the growth of intra-regional tourism, due in part to easier connectivity.
Looking more broadly at individual stocks, this growth in Cambodia should benefit NagaCorp Ltd , a Hong Kong-listed owner, manager, and operator of the largest integrated gaming and hotel complex in the country – NagaWorld. Here are four reasons why NagaCorp is set to continue growing its bottom line.
1. Cambodia’s booming visitor by China tourists
Cambodia welcomed 6.2 million visitors in 2018, a 10.7% increase from 2017, which represented the third-largest increase in international tourists in ASEAN, behind Vietnam and Indonesia. Leading this growth are visitors from China, which account for more than a third of the total, overtaking Vietnamese visitors in 2017.
2. Monopoly position until 2035 and casino license until 2065
Besides the tropical climate and historical sites attracting tourists to Cambodia, Asia’s growing gaming market will be another pull factor for the region. For NagaCorp, the company’s flagship complex NagaWorld, is Phnom Penh’s only integrated hotel-casino entertainment complex, and is in the enviable position of having a 70-year casino license that runs until 2065.
Additionally, until 2035, NagaWorld is the only casino allowed to operate with a 200-kilometre radius of Phnom Penh (except the Cambodia-Vietnam border area, Bokor, Kirirom Mountains and Sihanoukville). Effectively, NagaCorp runs a gaming monopoly.
3. Targeting profitable mass market segment
While Singapore and Macau offer premium gaming accommodations and facilities for its gaming players, NagaWorld has traditionally focused on the mass and premium mass market, a higher profit margin segment since there are no junkets – operators that facilitate gamers into the casinos.
4. A five-year net profit CAGR of 23%
On the financials side, NagaCorp has achieved a record net profit of USD $390.6 million in 2018, a 53% increase from the previous year. This number has expanded each year since 2014, with an eye-catching five-year Compound Annual Growth Rate (CAGR) of 23%.