he operator of the Nagaworld casino resort in the country and recently reported EBITDA of US$103.1m for the second half of 2016, comfortably ahead of expectations.
After talking with high-level officials from the Cambodian government at the Nagacorp results meeting, the Union Gaming analysts said the representatives from the ministry of economy and finance, the ministry of tourism and the ministry of the interior, the team got the impression that the government would be aiming at a single-digit tax on GGR.
This would be significantly lower than the current lowest rate in the region of a blended 10 percent in Singapore.
“This makes sense in order to attract further investment into Cambodia,” said Union Gaming’s Grant Govertsen in a note to clients. He added that though the lower single-digit tax rate was below the consensus from other analysts, the union team had already pencilled in a 5 percent rate into its forecasts. Govertsen added that though the timing of the final regulatory and tax bill remains unclear, the government is “striving for completion” by the end of the first half.
The Nagacorp results were driven by VIP and mass tables growth with the first seeing a 9 percent rise in volume which Union Gaming said was notably better than expected. While mass tables rose 11 percent 9in line with expectations), slots revenue was down 6 percent
“We think a combination of some slot floor disruptions as well as the absence of a couple of large players drove the temporary weakness,” Govertsen added. He noted that he believed the slot trends had returned to positive territory in the early part of this year.
The company noted that Nagaworld had enjoyed a 4 percent rise in gross gaming revenue in 2016 compared with a three percent decline in Macau.
Govertsen said the tax rate issue now being resolved would help focus the minds of investors on the upcoming Naga2 project which is slated to open in September. “The property is almost entirely glassed-in and interior fit-out if underway,” said Govertsen. “We remain confident that high-quality supply is exactly what’s needed to attract high-quality customers, which the company is on pace to accomplish via increased airlift from China in conjunction with a newly-announced partnership with Cambodia’s ministry of tourism.”