NagaCorp has outperformed properties in Asia and moving forward its outlook is better than that for Macau, Singapore and the Philippines, according to Morgan Stanley Asia.
In a note, Managing Director Praveen Choudhary points out that Nagacorp’s EBITDA has risen every year for the past decade except in 2009. It’s compound average growth rate for EBITDA since 2011 has been 24 percent, compared with 7 percent for Macau.
Naga 2 opened in December 2017, and the company saw EBITDA growth of 60 percent and 40 percent YoY in 2018 and 1H19, respectively, implying more than 40 percent ROIC, and the project is still ramping up, it said.
“We expect 2018-21 EBITDA CAGR of 17 percent for Naga, better than that for the gaming industries in Macau, Singapore and the Philippines overall. This could help the stock re-rating further.”
NagaCorp’s NagaWorld has a monopoly in and around Phnom Penh through 2035, a lower tax rate and lower labor costs. Naga also scores better than its Philippines and Singapore peers due to better growth prospects, lower tax rate and higher dividend yield.
The firm said its key concerns for the stock include 2020 earnings being slower compared with 1H2019, a potential new tax regime in Cambodia and uncertainty about its project in the Primorye gambling zone in Russia.