Pacific-focused casino operator, Donaco International, announces a stable first quarter of fiscal year 2025.
Donaco International Limited Faces Challenges at Star Vegas Casino, Maintains Stable Earnings
Donaco International Limited, a gaming company with a significant presence in Southeast Asia, is currently navigating through some financial difficulties at its Star Vegas casino in Poipet, Cambodia. The casino, which has been temporarily closed since the COVID-19 pandemic outbreak, has seen a significant drop in revenue due to ongoing Thailand-Cambodia border tensions affecting patronage.
According to the company's latest financial report, Star Vegas' net revenue for the quarter ended 30 September 2024, decreased by 31% to approximately A$6.30 million, down from the previous quarter's A$6.84 million. This decline in revenue was primarily due to the registration fees of new slot machines in September 2024, amounting to approximately A$0.37 million.
Despite the challenges at Star Vegas, Donaco managed to maintain stable earnings for the quarter, thanks in part to the strong performance of its Aristo International Hotel in northern Vietnam. The five-star casino hotel, which is situated on the Vietnam-China border and holds a 95% stake in a joint venture with the Vietnamese government, reported net revenue of A$3.95 million for the same quarter.
In light of the ongoing financial stress at Star Vegas, Donaco secured a US$5 million loan facility to support the property until reopening conditions improve. However, no formal reopening date from Cambodian authorities has been announced.
The company's financial report also highlighted some regulatory and operational cost challenges in the region. Asian gaming operators are facing regulatory changes, border issues, and evolving competitive dynamics, such as Macau’s satellite casino reforms and closures of smaller venues to comply with government policies. These pressures may indirectly affect Donaco’s operations by increasing compliance costs or limiting operational flexibility, especially in border casinos like Star Vegas that rely on cross-border patronage.
In addition, Donaco is evaluating potential disruptors such as the Integrated Entertainment Business Act in Thailand, a bill that allows casinos to operate legally within entertainment complexes. Non-Executive Chairman, Mr Porntat Amatavivadhana, commented on the performance of DNA Star Vegas and Aristo, stating that the average daily visitation at Star Vegas remained stable at 941 players, driven by the Company's membership loyalty program launched in January 2024.
Despite the challenges, Donaco ended the September Quarter with an increased cash position of A$33.02 million. The company is committed to executing its strategy in the evolving gaming industry of Southeast Asia, aiming to overcome the current difficulties and capitalise on future opportunities.
A separate Aristo tax matter is currently being evaluated by Donaco, which may impact the company's financials in the future. However, the company remains optimistic about its future prospects, particularly in Vietnam, where the Aristo International Hotel continues to thrive.
- The gaming industry, including Donaco International Limited and its Star Vegas casino, is experiencing challenges due to factors such as the COVID-19 pandemic, border tensions, and regulatory changes.
- In an effort to stabilize its finance, Donaco secured a US$5 million loan for Star Vegas, while its Aristo International Hotel in northern Vietnam contributed to maintaining the company's overall earnings.
- Despite the ongoing difficulties in the casino-and-gambling sector, Donaco remains optimistic about its future in Southeast Asia, especially in Vietnam, and aims to capitalize on future opportunities in the casino-games industry.
