Its been coming up as a fund holding in my fund posts and will include your post in my Monday links... The ratings downgrades are a concern - I have not looked close enough into their debt-cash situation though... I think its going to take awhile for Chinese tourists to come back to Cambodia plus they need to make it safer there (Sihanoukville has always been a bit rough....) for Chinese (e.g. the stories you hear about human trafficking of young Chinese to work in scam call centers and the like)...
Oh there is also a Korean Casino stock with a monopoly in Korea (locals I think are allowed into some of their opts) - same problem: Waiting for the foreign tourists to return...
NagaCorp's net debt is totally fine right now at sub-1x EBITDA. The problem is the need to finance another US$1.2 billion capex related to Naga 3. But they'll also generate cash in the next three years. The debt burden will be manageable, in my opinion.
The big question is what percentage of GGR comes from regular "tourism" and what percentage comes from capital flight and money laundering organised by junket operators. Phnom Penh is definitely a much safer city than Sihanoukville. I'm just sceptical that Beijing will continue to allow junket operators acquiring customers in mainland China.
Kangwon has an amazing competitive position being the only casino able to cater to local Koreans. But it's also a regulated business, and not sure how profitable the government will allow it to become.
Maybe the local govts who own it won't mind the extra profits ☺️:
"Kangwon Land (KRX: 035250) is 51% owned by four regional autonomous governments. Of the 17 total casinos in Korea, 16 of them are for foreigners only with no Koreans allowed. Legal gambling facilities are limited to only horse and bike racing. Due to a special act, Kangwon Land Hotel & Casino is the ONLY casino that accepts Koreans.
Q4 results missed expectations due to poor VIP traffic and uncertainties about when they will return. However, shares may have recently bottomed:"
ha - you picked a fun one Michael. Lots of landmines on this one. Beijing crackdown. unclear regulatory environment. plenty of negative reviews about "adult" activities that are transacted in the lobby/restaurants. Have picked this stock up a few time in the past but always put it back down.
Yeah, I don't see why you need a 3.5bn project when VIP is driving revenue. VIPs take up less gaming floor space than mass market customers. I believe VIP gambling will be less given the crack down. With all 3 projects so close to each other, unless supply meets demand, the building of Naga 3 could reduce the traffic in the NAGA 1 and 2. It was smart of them to extend the construction deadline to 2029. Not to mention, Japan is opening up casinos as well, adding an additional spot for tourist gambling. Money laundering likely won't be a thing in Japan though. Investment thesis becomes weird though, you only need so many rooms and tables in Naga3 for mass market, but mass market don't need to money launder so Japan/Macau/Las Vegas/Singapore/etc. become direct competitors for mass market business.
Yes, I 100% agree. It seems like a vanity project. I think the reality has been that Nagacorp has been reliant on VIP revenues, but VIP customers have mostly left Cambodia now that the government cracked down on money laundering and proxy betting.
Hi VL, sorry for the slow reply. I consider the delay as something positive as I believe the capex and the scale to be excessive. It should certainly be incrementally positive for the bonds, where capex was a major uncertainty factor for Nagacorp's aggregate cash flows. In any case, I prefer Bloomberry in the Philippines as junkets /POGOs are still allowed to operate there.
Its been coming up as a fund holding in my fund posts and will include your post in my Monday links... The ratings downgrades are a concern - I have not looked close enough into their debt-cash situation though... I think its going to take awhile for Chinese tourists to come back to Cambodia plus they need to make it safer there (Sihanoukville has always been a bit rough....) for Chinese (e.g. the stories you hear about human trafficking of young Chinese to work in scam call centers and the like)...
To me, Galaxy seems like the best positioned Casino stock in Asia: https://emergingmarketskeptic.substack.com/p/galaxy-entertainment-macau-best-casino-stock/comments
Oh there is also a Korean Casino stock with a monopoly in Korea (locals I think are allowed into some of their opts) - same problem: Waiting for the foreign tourists to return...
NagaCorp's net debt is totally fine right now at sub-1x EBITDA. The problem is the need to finance another US$1.2 billion capex related to Naga 3. But they'll also generate cash in the next three years. The debt burden will be manageable, in my opinion.
The big question is what percentage of GGR comes from regular "tourism" and what percentage comes from capital flight and money laundering organised by junket operators. Phnom Penh is definitely a much safer city than Sihanoukville. I'm just sceptical that Beijing will continue to allow junket operators acquiring customers in mainland China.
Kangwon has an amazing competitive position being the only casino able to cater to local Koreans. But it's also a regulated business, and not sure how profitable the government will allow it to become.
Maybe the local govts who own it won't mind the extra profits ☺️:
"Kangwon Land (KRX: 035250) is 51% owned by four regional autonomous governments. Of the 17 total casinos in Korea, 16 of them are for foreigners only with no Koreans allowed. Legal gambling facilities are limited to only horse and bike racing. Due to a special act, Kangwon Land Hotel & Casino is the ONLY casino that accepts Koreans.
Q4 results missed expectations due to poor VIP traffic and uncertainties about when they will return. However, shares may have recently bottomed:"
ha - you picked a fun one Michael. Lots of landmines on this one. Beijing crackdown. unclear regulatory environment. plenty of negative reviews about "adult" activities that are transacted in the lobby/restaurants. Have picked this stock up a few time in the past but always put it back down.
No way, I didn't know about those adult activities. It's a popular stock. But I agree, goes into the too-hard pile for me as well (!)
yeah someone who knows the founders' family once told my colleague that it was a "man's heaven" that was enough for me to stop looking at it.
Yeah, I don't see why you need a 3.5bn project when VIP is driving revenue. VIPs take up less gaming floor space than mass market customers. I believe VIP gambling will be less given the crack down. With all 3 projects so close to each other, unless supply meets demand, the building of Naga 3 could reduce the traffic in the NAGA 1 and 2. It was smart of them to extend the construction deadline to 2029. Not to mention, Japan is opening up casinos as well, adding an additional spot for tourist gambling. Money laundering likely won't be a thing in Japan though. Investment thesis becomes weird though, you only need so many rooms and tables in Naga3 for mass market, but mass market don't need to money launder so Japan/Macau/Las Vegas/Singapore/etc. become direct competitors for mass market business.
Yes, I 100% agree. It seems like a vanity project. I think the reality has been that Nagacorp has been reliant on VIP revenues, but VIP customers have mostly left Cambodia now that the government cracked down on money laundering and proxy betting.
What do you think about the delay of Naga 3, does that affect your valuation?
Hi VL, sorry for the slow reply. I consider the delay as something positive as I believe the capex and the scale to be excessive. It should certainly be incrementally positive for the bonds, where capex was a major uncertainty factor for Nagacorp's aggregate cash flows. In any case, I prefer Bloomberry in the Philippines as junkets /POGOs are still allowed to operate there.