Donaco rises on stellar performance of Poipet casino
Donaco rises on stellar performance of Poipet casino
The acquisition of the Star Vegas Resort and Casino in Poipet last year resulted in a stunning turnaround for Donaco International Ltd, catapulting the Asian casino operator out of the red with a seven-fold increase in revenue during its first year of operations.
However, the company’s management has no intention of taking its foot off the gas, and is projecting further growth on the back of a lucrative football sponsorship, increased VIP traffic and expansion into a neighbouring property, it said during its annual general shareholder’s meeting yesterday.
The Australian Securities Exchangelisted Donaco, whose flagship business is a boutique casino in northern Vietnam, purchased the Star Vegas for US$360 million in July 2015. The Poipet casino complex contributed nearly 84 percent of the group’s A$143.4 million (US$107 million) in revenue during the 2016 fiscal year ending June 30, and 71 percent of its A$78.7 million after-tax profits. “This venue has become the dominant contributor to Donaco’s revenue and earnings,” Donaco chairman Stuart McGregor said in his address.
“[Its acquisition] resulted in a seven-fold increase in group revenues during the 2016 financial year.” Located on the Cambodian-Thai border, the Star Vegas relies mainly on gamers from Thailand, where casino gambling remains illegal.
Efforts to increase visits have included junket deals, baccarat tournaments and an exclusive sponsorship agreement inked in August 2015 with Manchester United – a football team with a large Thai fanbase.
While the Star Vegas’s turnover during the first four months of fiscal year 2017 was lower than during the comparatively strong period a year earlier, Donaco CEO and managing director Joey Lim said he expects another strong year.
“We’re expecting DNA Star Vegas to improve during the remainder of the 2017 financial year, as we implement further marketing initiatives including additional tournaments for VIP players and leveraging off our status as the ‘Official Resort Partner’ of Manchester United in Thailand to increase mass market visitation,” he said.
Lim said Donaco had expected to launch the initiative in October, but delayed it until the second half of the financial year due to the death of Thailand’s king.
He also saw a prospect for further growth in the company’s recent expansion into a neighbouring property. In September, Donaco began receiving a $144,000 monthly fee for managing the new gaming floor at the Star Paradise, which lies adjacent to the Star Vegas. It retains an option to purchase the property, including its attached hotel.
“The decision to pursue this option will only be made after we have the opportunity to see how this business develops,” Lim added.
