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Regional casino businesses in Asia Pacific "increase in profile risk" by that time because of "greater clarity" about the global outbreak of the novel coronavirus, brokerage Union Gaming Securities LLC said in a note on Tuesday.
The memo specifically focused on the outlook for Hong Kong-listed Naga Corp Ltd, which holds exclusive casino licenses in Cambodia's capital Phnom Penh, which on Monday reported fourth-quarter and full-year 2019 results.
"While the Macau shutdown is net (and temporary) positive for Naga [ Inc]," Union Gaming analysts Grant Gawson and John DeCree said, referring to the 15-day closure of Macau casinos following the coronavirus alert, local gaming will have a high risk profile until there is greater clarity about the coronavirus."
Nagakov, who runs the Nagarwold complex, said in an announcement on Monday that the coronavirus problem would be "short-lived".
The group said Nagarwold posted a gross gaming revenue (GGR) of nearly $1.72 billion for all of 2019, up 19.9% from 2018. Nagarwold posted a net profit of about $521.3 million for all of 2019, up 33.5% from 2018.
In a note on the numbers, Union Gaming said the latter referred to Naga 1 and Naga 2, extensions of the complex, and Naga 1 and Naga 2, which opened in 2017.
"Fundamentally, business trends in Naga properties and all gaming sectors remained strong until the end of the fourth quarter of 2019 and the beginning of the first quarter of 2020. Cambodia remains open to business, and at least margins suspect Naga has had some alternative customers in Macau."
The casino closure in Macau will last until Feb. 19, including now. Some commentators think it could last longer.
Union Gaming previously said it was "potential" in its forecast for Nagakov, but would discount it for now given the fact there would be casino regulatory laws in Cambodia, due to delays in the passage of those laws.
"We have long baked into a pending bill that will adopt an international regulatory framework as well as a GGR tax," analysts at the brokerage wrote. "This bill has been an imminent event for many years, but we are removing it from our model until it comes to fruition."
The Union Gaming team added: "Meanwhile, we will explain the lack of regulatory legislation in the government's (approximately $20 million) follow-up tax payment assumptions extracted from the company in 2019. This is very advantageous compared to our expectation of a nearly $120 million GGR tax in 2020."
Previous comments from Nagakov's management said the new casino law could allow Nagakov to move from a flat tax to a system that is likely to include a percentage tax on GGR, albeit gradually increasing over time, on total revenue.
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