Inside Asian Gaming

INSIDE ASIAN GAMING | October 2008 8 Cover Story economy such as China or Europe where the currency is not directly pegged to a weakening US dollar. Cambodia has often been ruled out by foreign investors as having too many question marks surrounding corporate governance and corruption. Change is in the air though, led by the good example of the gaming operator NagaCorp, the first Cambodian company of any kind to list on an internationally-respected stock exchange, namely Hong Kong’s. New rules Cambodia’s newly re-elected govern- ment promised in mid-September that it would pass laws to formally regulate the casino sector. Challenges nonetheless re- main. The issue for Cambodia may be not so much the passing of regulation but the effective and transparent enforcement of it. But the success of NagaCorp is a striking ex- ample of how things can change and what can be achieved if the desire for change is strong enough. N agaCorp goes against the flow when it comes to the general scepticism surrounding Cambodia’s financial probity. Its flagship casino resort NagaWorld— the only one permitted within a 200-kilometer radius of the national capital Phnom Penh – has carved a very effective niche for itself as a venue serving medium level VIPs from a hinterland including South Korea, Malaysia, China, Thailand and Vietnam. It is currently undergoing a major redevelopment.This includes the creation of the country’s biggest ballroom capable of hosting international conferences, with a built in audio system for simultaneous translation. Revenue, profit up NagaCorp reported significant growth in mass market and VIP gaming in the first half of 2008. In an earnings conference call,analysts heard total revenue for the half year rose 59.3% to US$109.1 million, compared with US$64.7 million in the first half of 2007. Profit before taxes was up 26.3% at US$26.4 million compared to US$20.9 million in the previous half year. The total number of players actually fell, from 9,000 to 7,000, but the company says it is focusing on more revenue from medium limit players rather than quantity. The average check-in amount of VIP players rose from US$25,000 to US$32,000. NagaCorp said the reason for the US$50,000 upper limit was to avoid the volatility seen with high stakes table play in games such as baccarat. The company was also upbeat about attracting new junket business from Taiwan, Indonesia, India, Japan, Korea, Thailand and even Burma. Medium limit, lower risk In response to analysts’ questions about the competitive challenge posed by Macau and from 2009 Singapore, Dr Chen Lip Keong, Chief Executive of NagaCorp, said the company was not in the same market because of its focus on medium limit players. The company added its position was further strengthened by absence of long-term debt. The redevelopment programme at its flagship property NagaWorld was being funded from operational cash, said Dr Chen. NagaWorld is undergoing a major redevelopment A Cambodia Success Story