In spite of internal turmoil and ongoing legal problems, Asian casino operator Donaco International Ltd says it flipped back to profitability in the third quarter.
On Friday, the Australia-listed Donaco released a three-month trading update ending September 30, during which the firm said its results showed “a very significant improvement” from last year’s same era.
Group revenue increased by 42.3 percent year-on-year to AU$24.25 million (US$ 16.6 million), while profits nearly tripled to AU$8.9 million and net profit after tax hit AU$3.8 million compared to a loss of AU$1.76 million in Q3 2018.
Donaco credited the turnaround with increased revenue, especially at its Aristo International Hotel property in northern Vietnam, and more strict cost controls, including “the departure of unprofitable junkets” at Donaco’s main casino, Star Vegas in Poipet, Cambodia.
The “new management team” at Star Vegas, led by new CEO Paul Arbuckle, who took over the reins in June, oversaw the junket rethink. In response to vocal investor concerns about the company’s sorry state of affairs, Donaco has since revamped its board of directors following the ousting of brothers Joey and Ben Lim in July.
The ensuing “rationalisation” of the Star Vegas junket arrangements resulted in the VIP turnover of the estate falling to 39% to THB12.1b (US$ 400 m). Nevertheless, the VIP win rate soared to 3.55 percent over a full point, which helped boost net income of the property to THB358 m by nearly 3 percent, while earnings rose to THB128.2 m by 6.7 percent.
It wasn’t all roses at Star Vegas, as an average daily visitor dropped nearly 16 percent due to what the company claimed was “increased competition in the Poipet area Donaco’s update made no mention of Star Vegas’ online gambling operations, which started last August after years of delay. Such operations appear to be living on borrowed time following the August announcement by the Cambodian government that no new online licenses would be given and existing licensees would be forced to complete their operations by the end of the year.
The Aristo property posted a $247.2 m rise in VIP turnover from just $7.7 m in Q3 2018 and a two-fifths increase in daily attendance, which helped push the property’s revenue from $3.1 m up to $5 m, while earnings increased from just $190k to $3 m.
The recent history of Donaco has been dominated by legal disputes surrounding Star Vegas, including the long-running battle with a Thai consortium employed by Donaco to manage gaming operations at the nearby Star Paradise casino. These same former partners also seek to end the land lease of Donaco on Star Vegas.