NagaCorp’s Financial Confidence Rises with Improved VIP Gaming

Prominent Hong Kong-listed casino operator NagaCorp remained confident it would fulfill its financial commitments, particularly as it approaches the maturity date of its outstanding senior notes in July 2024. This optimism is underpinned by the company’s bolstered cash reserves, significantly enhanced due to the stellar performance of its flagship property, the Cambodian integrated resort NagaWorld.

Financial Results Are Up across the Board

NagaCorp recently unveiled its financial results for the nine months ending 30 September 2023. These results showcase a noteworthy increase in the group’s cash and cash equivalents, surging from $156 million at the end of December 2022 to a robust $297.6 million. Such a remarkable boost sets a solid foundation for the company’s positive outlook.

Moody’s Investors Service had previously raised concerns regarding NagaCorp’s refinancing risks. A $545 million bond maturity scheduled for mid-2024 was especially worrying. The operator faced challenges tied to limited sources of liquidity due to its lack of bank facilities and non-core assets available for divestment. Failing to meet these obligations could have dire consequences, severely impacting the company’s business.

NagaCorp’s recent financial report revealed a 12.1% year-on-year increase in gross gaming revenue (GGR), totaling $379.0 million, driven by a resurgence in the premium gaming market segment. Similarly, the Referral VIP GGR witnessed remarkable growth, contributing to the 7.4% increase in adjusted EBITDA, which reached $215.4 million. The company used these proceeds to repurchase $69.5 million of its notes, leaving approximately $472 million outstanding.

The Operator Capitalized on Shifting Regional Trends

Despite the challenges posed by the upcoming bond maturity, NagaCorp has conveyed its unwavering confidence in its ability to meet all of its financial obligations when the outstanding senior notes mature in July 2024. The operator’s reduced reliance on junkets helped it adjust its trajectory, creating a solid foundation for future growth despite current challenges.

The VIP sector remains a cornerstone of NagaCorp’s operations, bolstered by an increasing number of domestic expatriates. Furthermore, the resort has welcomed a growing number of visitors from China, further strengthening the direct VIP gaming segment. This trend coincides with the ongoing shift in the region’s gaming landscape as Macau pivots to a broader customer base.

NagaCorp has outlined plans to expand its Referral VIP segment, aligning with its current growth strategy. This expansion will involve identifying and recruiting reputable referral VIP agents, enhancing its presence and market share in this gaming niche. The operator’s strategic adjustments have strengthened its financial position, addressing the impending bond maturity. While NagaCorp still has significant debt, recent developments caused optimism as its strategic vision pays off.