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New study values “less than optimal” Vietnam gaming market at up to US$1.2 billion

Wednesday, 09 August 2017 23:14
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Vietnam’s gaming market is worth up to US$1.2 billion, according to a new study by Union Gaming, with the Southeast Asian nation’s gaming industry suffering from “less than optimal geographic distribution and less than optimal regulations.”

The study, conducted by Macau-based analyst Grant Govertsen, surveyed around 30 gaming facilities in Vietnam comprising 400 gaming tables and 3,000 slot machines ranging from small slots parlors to the luxury integrated resort The Grand Ho Tram located on the east coast outside of Ho Chi Minh City.

“While the government does not disseminate GGR data, we can approximate via the three publicly traded companies with exposure to Vietnam, as well as via conversations we've had with operators in the market,” Govertsen said. “We estimate that Vietnam today is a US$800 million to US$1.2 billion GGR market, with less than optimal geographic distribution and less than optimal regulations.”

The study also noted that, despite reports of the government easing restrictions on gaming operations this year – including the announcement of a three year trial in which locals will be allowed to gamble in two Vietnamese casinos – the realty is somewhat more muted.

“The government has two locals licenses already approved for IRs in each of Phu Quoc and Van Don. Details are still quite murky as to the respective scope and timing of the respective IRs in each of these locations, suffice to say that they have been awarded to local Vietnamese property developers with no gaming experience,” it says. “Neither of these locations are easily accessible from the major population and wealth centers of Hanoi and Ho Chi Minh City.”

However, it does paint a positive picture for Hong Kong-listed Suncity Group Holdings, which has recently acquired a 34% stake in an Integrated Resort project in Hoi An. The deal, which will also see Suncity Group provide consulting and management services, should provide solid return on investment according to Govertsen with Phase 1 – due to open in 2019 – providing 140 gaming tables, 1,000 electronic gaming machines, a golf course and almost 800 hotel rooms.

“Given that the net Phase 1 project cost should be significantly lower than US$650 million when considering residential sales, and given Suncity's expansive VIP connections, we would expect the project could achieve a decent ROI even under the current foreigners-only construct,” the study says.

“By way of example, the Crown International Club in Da Nang, which is VIP-centric, reportedly generates Macau flagship-like levels of VIP volume. However, the optionality of becoming part of the locals pilot is very intriguing. Central Vietnam (Hoi An, Da Nang) has become the playground of Vietnam's wealthy and as such could attract an outsized share of their gaming wallet in the event the Hoi An project were to be approved for locals.”




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