Inside Asian Gaming

INSIDE ASIAN GAMING | May 2012 34 NagaWorld I n many respects, NagaWorld is an improbable operation. It’s in Cambodia, still one of the poorest nations on the planet, with nominal GDP per capita under US$1,000 per person.The country’s neighbor to the west forbids gaming and has a strict Buddhist tradition supporting that official policy. To the east is a communist country, relatively poor and long wary of games of chance. Worse yet is the fact that the nearest relatively wealthy country, Malaysia, has an incumbent casino giant, Genting. And then of course there’s Macau—arguably the global geographic center of gaming—which lies less than three hours by air to the north. It would be very easy to write off NagaWorld or just file it away with the other Cambodian casinos, which are small, semi-legal border operations. But in the 17 years since it got its start, famously on a barge on the Mekong River in the capital city of Phnom Penh, NagaWorld and its corporate entity NagaCorp have proven again and again that what at first didn’t seem to make sense may actually be one of the better gaming propositions in this part of the world, or anywhere for that matter. Through a combination of luck, solid management, a modicum of humility and a keen understanding of the market it serves, the company has built an operation that is not only successful but also uniquely positioned, set to grow nicely into the future and structured to survive any economic shocks that may come its way. In fiscal 2011, net profits more than doubled, margins remained the highest for a casino group in Asia, near 50% on an EBITDA basis, and hotel occupancy was about 80%. NagaCorp’s stock price has more than tripled in two years and the company now has a market capitalization of over US$1 billion. It turns out that the locationwas far more an asset than a liability. Being in Cambodia gives the company advantages that no one else can match. Costs there are very low— Cambodia’s basic wage is less than US$100 per month. Land and other essential inputs are also quite cheap given the relative lack of wealth in the country. While billion-dollar- Value Proposition While high-end VIP players looking for a gambling getaway in Asia will naturally gravitate to Macau and Singapore, their low- and mid-tier counterparts may find Cambodia’s NagaWorld a better bet Spa room at NagaWorld