Regional conflict sees Donaco International Q2 revenue fall AU$5.26m

Key points:

– Net revenue across Donaco International’s two venues is down year-on-year from AU$13.73m to AU$8.47m, a decrease of AU$5.26m

– Losses driven by Star Vegas venue in Cambodia due to border conflict with Thailand

– Overall DNA group EBITDA down 57%

– Aristo International Hotel in Vietnam exhibits slight revenue rise – AU$190,000

Donaco International, owner of Star Vegas and the Aristo International Hotel, two important gambling hotspots in the South-East Asia region, has posted its Q2 results, with net revenue taking a 38% dip, down by $5.26m year-on-year.

The dip is driven primarily by the Star Vegas venue, which has been severely impacted by the escalated military and political conflict at the Cambodian and Thai border. 

The Hotel and Resort is located in Poipet, Cambodia and represents the nearest significant gambling operation near the Greater Bangkok region, with a heavy reliance on tourism from the neighbouring country. 

Increased tensions and armed conflict up and down the more than 800km border has seen Thailand impose a ban on non-essential border crossings – a sanction that has seen hotel daily occupancy drop by around 18%. 

Net revenue is down at the casino to AU$4.31m, that’s a AU$1.97m drop compared to Q1, but it’s an even starker drop year-on-year – last June, net revenue was reported as being AU$9.76m. 

Those disappointing results in Cambodia are offset by steady if minimal growth at the Aristo International Hotel in northern Vietnam. 

At this boutique casino, Donaco International’s flagship venue, revenue is up at AU$4.16m — that’s a 4.7% rise year-on-year, and 10% up compared to the March quarter this year. 

Operating expenses have slightly increased at Aristo also, and the success of the destination is not enough to fully mitigate the downturn at Star Vegas.

Good to know: Tensions with Thailand have seen Cambodia ban Thai movies and TV shows as well as introduce a boycot of Thai internet links and power supplies

The overall group EBITDA across both venues is down at AU$3.68m, a 57% dip. 

Donaco’s Non-Executive Chairman, Mr Porntat Amatavivadhana admitted that the company has been operating in a challenging environment but pointed out that: “Aristo has continued to perform in line with previous quarters, with stable revenue growth and improved EBITDA. Visitation numbers also slightly improved over the quarter, following an increase in tourism to the region.” 

Revenue generated through VIP customers is one area that has seen an increase, with that demographic proving to be less affected by the stricter border controls with Thailand. 

The outlook is mixed in the mid-term and unpredictable in the short term, but the performance of Aristo offers comfort to investors, while a ceasefire announced in late July between the Thai and Cambodian military will fuel hopes that regional tourism in the area will improve, eliciting recovery at Star Vegas. 

Shareholders are assured in the report that they will be updated as the situation develops as to how the venue will continue to be managed.

Thai Government officials have in recent months expressed interest in legalising casinos and developing gambling complexes within the country. 

Former Prime Minister and Manchester City owner Thaksin Shinawatra suggested that the initiative could generate annual government revenue of up to 100bn baht (US$3bn). 

Donaco International’s report notes that the withdrawal of the Government’s commitment to this proposal in June should benefit the group in the long run.