Southeast Asian casino operator Donaco International Limited returned to positive EBITDA in the three months to 31 December 2020, driven by a focus on attracting VIPs based in Cambodia and a drastic reduction in operating costs.
The improved results follow some much needed positive momentum in the back half of 2020 that not only saw its properties in the Cambodian town of Poipet and in northern Vietnam reopen for business, but a boardroom makeover help put an end to a long-running legal dispute with the owners of the land upon which the Poipet business, Star Vegas, sits.
It was Star Vegas that drove the 4Q20 recovery for Australian-listed Donaco, with rolling chip turnover of AU$132.75 million (US$101.5 million) driving revenue of AU$5.57 million (US$4.3 million) – up from just AU$130,000 (US$99,000) in the third quarter. While still well down on net revenue of AU$13.62 million (US$10.4 million) in the final quarter of 2019, operating costs were slashed from AU$8.93 million (US$6.8 million) to just AU$1.86 million (US$1.4 million). As a result, Property level EBITDA of AU$3.70 million (US$2.8 million) at Star Vegas wasn’t too far shy of 4Q19 EBITDA of AU$4.70 million (US$3.6 million).
It also allowed for group-wide EBITDA of AU$3.57 million (US$2.7 million), with Donaco’s Aristo International Hotel in Vietnam suffering a slight loss due to the closure of its nearby border with China.
“The December quarter was a turnaround period for Donaco,” said Non-Executive Chairman Porntat Amatavivadhana. “We are extremely encouraged that since the casinos’ limited reopening, Star Vegas is no longer making a loss and the outlook for Aristo is increasingly positive.
“Our strategy is bearing results, underpinned by targeting clientele from the local region, whilst keeping tight control over our costs following the revision of some service provider agreements. We are also experiencing a gradual easing of COVID-19 restrictions across South East Asia and the situation is expected to ameliorate.
“Our strategy for 2021 will build on these pragmatic initiatives, underpinned by a strengthened balance sheet as the performance from Star Vegas and Aristo continues to improve and provides a solid platform for growth.”
Donaco also revealed it expects to pay off remaining debt of AU$10.1 million (US$7.8 million) in 2021, having paid down AU$6.5 million (US$5 million) in 2020.