NagaCorp Ltd which operates NagaWorld casino resort, the biggest casino in Cambodia is in the process of building a major shopping complex called NagaCity Walk which will connect NagaWorld casino resort with the second phase of the Naga2 project. Union Gaming Securities Asia Ltd recently paid a visit to the site and confirmed that the NagaCity Walk will open to the public during the second half of 2016.
Daiwa Securities Group Inc, a brokerage firm had interviewed senior executives from NagaCorp Ltd in April 2016 who said that they expected operations to begin from August 2016. The Naga2 project will have over 1,000 new luxury suites and hotel rooms; 500 electronic gaming machines and 300 gaming tables based on a filing made with the Hong Kong Stock Exchange.
In a statement, Union Gaming said “More importantly, there has been significant vertical progress of Naga2, which we believe is only a few weeks away from topping out. Based on the current pace, we would look for the property to be turned over to the company by early 2017 for interior fit-out.”
The continuous decline in Macau’s casino industry has resulted in more growth for the casino industry in neighbouring countries as gamblers from Mainland China have preferred to travel to destinations like Vietnam, Cambodia and the Philippines were gaming laws are more friendly. Gross Gaming Revenue (GGR) in Macau dropped by 13 percent during the first quarter of 2016. Cambodia is expected to benefit the most from Macau’s casino industry slump as Morgan Stanley has predicted that its VIP market segment would record the highest revenue growth of 39 percent for 2016.
Union Gaming released a note on NagaCorp’s performance during the first quarter of this year focusing on volume trends instead of GGR. The VIP rolling chip volume for NagaCorp was +65 percent; electronic gaming machine bills-in was at +32 percent and mass table drop was at +15 percent which resulted in a GGR total of +35 percent year-on-year.
The Cambodian government is expected to pass a new gambling law before the end of the year that will impose new tax rates and seek to provide better regulations for the casino industry. The government is looking to attract more foreign investment into its casino industry and also boost tourism, with a special focus on tourists from Mainland China.
Union Gaming believes that this new law would not impose any new GGR tax this year and when implemented the max tax rate will not cross 5 percent and thereby help NagaWorld to continue to be a competitive force in the country.