Donaco International Announces March 2019 Quarter Update; Stock Shoots Up 7.5%

Donaco International Announces March 2019 Quarter Update; Stock Shoots Up 7.5%

Donaco International Limited (ASX: DNA), based in Sydney, Australia, is engaged in the leisure and hospitality businesses with operations across the Asia Pacific region. The company’s flagship business is the Aristo International Hotel (95% interest in JV with Government of Vietnam) located in northern Vietnam on the border with China’s Yunnan Province. Besides, it’s another major business is the Star Vegas Resort & Club, a casino and hotel complex comprising approximately 100 gaming tables, 1500 slot machines, and 385 hotel rooms in Poipet, Cambodia on the border with Thailand.

Recently, the Group released its quarterly report and trading update for the three months to March 31st, 2019, whereby the net revenue amounted to AUD 25.50 million with an EBITDA of AUD 10.82 million. The overall results were in line with the prior corresponding period (pcp) ended March 2018 (Net revenue: AUD 23.65 million; EBITDA: AUD 11.03 million), driven primarily by higher group revenues and tighter management of corporate costs.   Corporate costs witnessed a reduction from AUD 2.71 million in the March’18 quarter to AUD 1.68 million in the current quarter.

DNA’s Star Vegas segment

The VIP turnover increased during the quarter to THB 20.3 billion, which is higher than THB 18.52 billion in March 2018, supported by the addition of new junket groups as management rebuilt the VIP gaming business. Besides, the main hall turnover almost tripled to THB 64.6 million after the company introduced new mass market tour groups, primarily from Thailand. The VIP win rate was recorded at 3.37%, above the 2.80% achieved during the March 2018 quarter, and is now trending at 3.01% for FY19 year to date.

Overall, the net revenue amounted to THB 439.6 million, slightly up on THB 437.1 million in the pcp as the higher gross gaming revenue from table games was offset by higher junket commissions and profit-sharing costs, and lower slot machine revenue. At the Star Vegas Resort, the online gaming business is currently being relaunched with a new software platform prior to collaborations with the new marketing partners and is expected to go live in its new format by May 2019. As the operating expenses increased to THB 242.1 million, up on THB 172.5 million in the pcp due to higher legal costs, the EBITDA was recorded at THB 197.6 million, below the EBITDA of THB 264.6 million in the pcp.

Aristo International Hotel business

 The rolling chip turnover of USD 294.1 million decreased from USD 368.1 million in the March 2018 quarter as management continued to rebuild the VIP business from the soft start to FY19. The net revenue of USD4.5 million was also slightly below the USD4.6 million achieved over pcp due to 40% reduction in junket commissions. Overall, the Aristo recorded EBITDA of USD2.3 million for the three-month period, driven by tight cost control.

On Friday, April 26th, 2019, the DNA stock closed the day’s trading at AUD 0.086, up 7.5% with ~ 2.06 million shares traded.


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