Lao Cai casino upgrades
Lao Cai casino upgrades
ASX-listed Donaco International last week signed a binding agreement to take the majority stake in the Lao Cai International hotel and casino.
According to the agreement, the Australia-based Donaco International will purchase the additional 20 per cent stake from the state-owned Sapa Petroleum Tourism Joint Stock Company, increasing its holding to 95 per cent, from the current 75 per cent. The remaining 5 per cent will continue to be held by the state-owned firm.
The transaction marks a major investment expansion by Donaco International – led by two grandsons of the founder of Asian casino empire Genting Berhad – in Vietnam, where it sees great potential for developing gaming services. The three-star Lao Cai International Hotel will act as a core asset, with plans to upgrade the ten year old hotel to a 5-star hospitality facility.
The Lao Cai International Hotel currently possesses just 34 rooms and eight gaming tables. It has received approval from the Vietnamese government to operate up to 300 electronic gaming machines, including 150 slot machines and 150 video gaming machines, but only 36 slot machines are currently in operation at this time.
Donaco International, in presentations for its annual general meeting held last November, reported Lao Cai International has taken over AUS$15.67 million (14 million) in revenue and recorded post-tax profits of AUS$7 million ($6.2 million).
“The financial results for the year reflect the very strong growth at the company’s flagship Lao Cai casino property, with a 41 per cent increase in both revenue and post-tax net profits,” Stuart McGregor, chairman of Donaco International, said at the annual general meeting. According to the company, the increase in stake will lead to strong revenue growth in 2014, especially as the existing hotel and casino were showing strong cash flows and profitability thanks to the increase of Chinese tourists.
Given Vietnam’s stronger growth, Donaco International and its Vietnamese partner are building a new 5 star hotel nearby worth some $53 million. The new hotel is expected to have a soft opening in March this year and will become fully operational in July, comprising of 428 rooms and 50 gaming tables.
On November 23, 2013, the company announced it had successfully raised AUS$25 million ($22.4 million) for the construction of the new hotel.
vir
