Opinion piece

Sell Nagacorp now
BY Rafi Farber ON April 28, 2020

Nagacorp right now is one of the more dangerous casino stocks in the world to invest in. It’s especially dangerous as opposed to others because the company is specifically very confident it will sail through the current COVID-19 depression that it is throwing caution to the wind.

The last time we covered this stock here was in October 2015. Since then, and despite a 36% fall from pre-COVID-19 highs, the stock is up an amazing 70%. If you have any profits, I’d suggest locking them in now. I have always been wary of Nagacorp and companies with similar business models. In my last coverage I was cautiously optimistic and said that investors considering investing in this casino should do so only as an income investment with a time horizon of 2020. Well, 2020 is here, the gains are huge, and now it’s time to move on. I am no longer cautiously optimistic here.

This is a company that has the potential to fall quickly. I do not know if it will for sure, but the risk is too big and I don’t trust the optimism in its recent press releases that essentially say that everything will be just fine.

Nagacorp is very reliant on its government monopoly, so much so that management believes COVID-19 will do very little to harm operations even short term. Nagacorp believes it can be as spendthrift as it wants to be because the thinking at the highest levels is that no matter what it does and no matter what happens, it can rely on its monopoly to bail it out of any trouble. This can make its business decisions especially careless when real problems do show up.

Cambodia’s reports on infection rates in the country are one thing. Officially, there are only 122 total cases in the country that sees most of its tourism from China, and zero deaths. A single report that one person who worked in Nagaworld was infected, met with such fierce opposition from the company that the phrase “Thou doth protest too much” comes to mind. Apparently the worker was named and Nagacorp denied that any such person even worked at the casino. Other companies would have either stayed silent or said something neutral like “Nagacorp continues to stay vigilant and values the health of its staff,” or something along those lines.
Full article: https://calvinayre.com/2020/04/28/casin ... acorp-now/

The most relevant point in the article is the mention of a likely run on the US dollar.

I wouldn't be holding assets in USD right now, as printing trillions of $ to sustain the US stock market is a proven recipe for disaster. Think Venezuela or Zimbabwe.

China, Russia and other states are turning away from the USD as a reserve currency and slowly ditching their USD bonds. The long term implications are staggering and the current crisis will exacerbate the trend.

I've been switching my assets to €, yen and residential real estate in southern Europe. Plus a chunk in CHF obviously.

UPDATE: July 2022

NagaCorp soars back to profit in 1H22, resumes dividend payments
Ben Blaschke
Tue 19 Jul 2022 at 06:09
NagaCorp confirms full gaming operations now up and running at NagaWorld
Hong Kong-listed NagaCorp Ltd has reported a net profit of US$52.7 million for the six months to 30 June 2022, reversing a US$77.2 million loss recorded a year earlier on the back of higher business volumes across all business segments at its Cambodian integrated resort, NagaWorld.

According to information filed overnight, average daily business volumes in the lucrative mass and premium mass segments have recovered to 80.3% and 71.8% of 2019 levels respectively since Cambodia eased COVID-19 restrictions, while all segments also showed sequential growth in 2Q22 when compared with the March 2022 quarter.

As a result, NagaCorp reported US$130.1 million in EBITDA for the first six months of this year, up from US$4.5 million in 1H21.

Highlighting its steady improvement, NagaWorld generated gross gaming revenue of US$237.35 million for the six month period of which US$110.3 million was in Q1 – growing by 15.3% to US$127.1 million in Q2. Likewise, EBITDA grew by 13.2% quarter-on-quarter from US$61.0 million to US$69.1 million, while net profit grew by 39.4% from US$22.0 million in Q1 to US$30.7 million in Q2.

In full: https://www.asgam.com/index.php/2022/07 ... -payments/

This is all tax free isn’t it?

Posted on: July 27, 2022, 07:20h.

NagaCorp recently reported strong growth this year as it emerges from COVID-19. NagaWorld is coming back to life and will soon begin to add new amenities to increase its gambling operations.

Mass market gambling rebounded by 80.3% in the first half of the year compared to 2019. Premium mass improved as well, recovering 71.8% of its pre-COVID-19 levels.

As a result, those two segments are steering the company’s business. At the same time, McNally is confident that the company will figure out how to attract VIP gamblers without heavy reliance on junkets.

NagaCorp is currently undergoing an internal reorganization. In April, the company’s founder, Dr. Chen Lip Keong, assumed the title of Senior CEO, giving more control of the company to his three sons as co-CEOs.

A couple of days ago, he took another step back. Chen transferred 67% of the issued shares he held in NagaCorp and put them in a family trust. Chen created the trust specifically for the creation of a succession plan.

That trust, Sakai Trust, now holds 69.23% of all issued shares of the company. Before the move, it indirectly controlled just 2.55% of the company’s share capital.
https://www.casino.org/news/nagacorp-ch ... bal-stage/

NagaCorp to Likely Face Financial Trouble, Moody’s Predicts
NagaCorp may face financial trouble as it’s yet to recover from the pandemic. A huge bond that will mature in 2024 is one of Moody’s biggest concerns.
October 14, 2022
by Gambling News

Moody Corporation’s bond credit rating business, Moody’s Investor Service, is concerned about the future of NagaCorp amid China’s war on junkets. The Hong Kong-listed Cambodian operator has been struggling to recover from the pandemic and now faces significant refinancing risks.

Moody’s concerns became evident when the rating company downgraded NagaCorp’s corporate family and senior unsecured ratings from B1 to B2. The former firm expressed concerns about the Cambodian operator’s recovery and believes that tough years might await the gambling and hospitality company.

One of Moody’s biggest concerns is a $545 million bond that will mature in mid-2024. This might be a significant problem as NagaCorp’s current sources of liquidity have been limited and the company lacks bank facilities and divestible non-core assets.
In full: https://www.gamblingnews.com/news/nagac ... -predicts/

Moody’s. The same experts who rated very dodgy banks and financial institutions and sub par mortgages?

Pah.

($500 million was about their fine to the securities commission, oddly)

Moody’s to review NagaCorp for downgrade pending action to address looming US$472 million bond repayment
March 6, 2023
by Inside Asian Gaming
Moody’s Investors Service said Friday it has placed NagaCorp’s B2 corporate family rating (CFR) and the B2 senior unsecured rating on the company’s US dollar bond on review for downgrade should it fail to take substantial action around refinancing looming debt in the coming months.

The review comes after Moody’s had already stated last November that efforts by NagaCorp ro repurchase up to US$120 million of its US$541.7 million notes due July 2024 was unlikely to help the company avoid a default when the remaining notes fall due. NagaCorp ultimately repurchased US$69.5 million of its notes, leaving around US$472 million outstanding.

In a Friday note, Moody’s analyst Yu Sheng Tay explained, “The ratings review reflects the likelihood of a downgrade if NagaCorp fails to make substantial progress over the next three months to refinance its outstanding US$472 million bond coming due in July 2024.” ...


NagaCorp recently announced a net profit of US$107.3 million in 2022, reversing a 2021 loss of US$47.0 million on a 99.5% increase in gross gaming revenue to US$445.9 million.
In full: https://www.asgam.com/index.php/2023/03 ... repayment/

That's one hell of a remortgage.

What's the going rate for a B2 rated corporate bond with a negative downward outlook? 7%? More?

According to Moody's a US Corp AAA is 4.68%