Donaco’s 1Q Fiscal Year Report: A Mixed Bag for Casino Performance
On October 25, 2024, Donaco International Ltd, a notable player in the Southeast Asian casino industry, released its financial performance for the first quarter of its fiscal year, which ended on September 30. Despite achieving a year-on-year revenue increase, the company reported a sequential decline in key financial metrics, particularly in earnings before interest, taxes, depreciation, and amortization (EBITDA).
Stable Revenue Performance Amid Variability
Donaco’s net revenue for the first quarter stood at just under AUD 10.3 million (approximately US$6.8 million), slightly down from AUD 10.8 million in the previous quarter but noticeably up from AUD 9.1 million in the same period last year. This reflects a solid year-over-year growth, showcasing the casino’s resilience in a competitive market, although quarter-over-quarter comparisons reveal challenges ahead.
The group reported an EBITDA of AUD 5.6 million, which marks a 12.5 percent sequential decrease but a positive 10.1 percent year-over-year improvement. The dropout in EBITDA raises questions about the factors influencing the performance of Donaco’s primary asset, the DNA Star Vegas resort.
Performance Breakdown of DNA Star Vegas
Located in Poipet, Cambodia, near the Thai border, the DNA Star Vegas resort is Donaco’s flagship property. Its EBITDA took a significant hit, dropping 17.6 percent compared to the previous quarter and 15.5 percent year-on-year, resulting in an EBITDA of AUD 3.8 million. Net revenue for the resort also showed a decline, falling to AUD 6.3 million from AUD 6.8 million in the previous quarter and just short of the AUD 6.7 million recorded in the same quarter last year.
Non-executive chairman Porntat Amatavivadhana attributed some of the decline to unexpected registration fees associated with new slot machines, which amounted to about AUD 0.37 million. His comments suggest that while the casino’s revenue remains relatively stable on a yearly basis, specific regulatory costs have dampened performance during the quarter.
Insights from Aristo International Hotel
In contrast to the challenges faced at Star Vegas, Donaco’s Aristo International Hotel, located near the Vietnam-China border, showed resilience with revenue remaining nearly flat compared to the previous quarter at nearly AUD 4 million. Impressively, Aristo’s revenue soared by 59.3 percent when compared year-on-year. Property-level EBITDA also rose slightly, reaching AUD 2.52 million—over double what it was a year prior. This performance reflects increasing demand in the area, highlighting the hotel’s potential as a strong performer in Donaco’s portfolio.
Navigating Legal and Market Challenges
Amid these findings, Donaco’s management continues to emphasize its strategic focus on navigating the evolving gaming landscape in Southeast Asia. The potential legalization of casino resorts in Thailand and an ongoing tax dispute in Vietnam present both risks and opportunities for the group.
In regard to the Aristo tax matter, Donaco announced that it had received permission to initiate legal proceedings against a decision made by Vietnam’s General Department of Taxation. Should the outcome not be favorable, the company faces a potential liability of approximately AUD 8.86 million, a figure that could significantly impact its financial health.
Conclusion: A Future of Potential
While Donaco International Ltd reported a quarter-over-quarter decline in EBITDA for its fiscal 1Q, the company also demonstrated a commendable ability to grow its revenues year-on-year. The performance discrepancies between DNA Star Vegas and the Aristo International Hotel highlight the complexities of operating in multiple markets.
As they move forward, the company’s capacity to navigate legal challenges and market changes will be crucial to its sustained growth and profitability. Stakeholders will undoubtedly be keeping a close eye on Donaco’s strategies in the coming months, as the company works to build on its existing foundations while adapting to an ever-evolving gaming industry landscape.
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