COVID-19 Continues Damaging Donaco Balance Sheet

Inside and empty-looking Star Vegas, owned by Donaco International

COVID-19 continues battering ASX-listed Donaco International‘s balance sheet, resulting in a 53.8% decline in revenue for the first three months of 2021.

Vaccines for COVID-19 are rolling out around the world, but some countries are experiencing further outbreaks. Cambodia is one such country, which happens to be where Donaco’s flagship casino is located.

The Star Vegas is located in Poipet, part of the Banteay Meanchey Province. Authorities there ordered the temporary closure of all casinos on April 27. There is no end date for the lockdown. Donaco confirmed the closure via a statement to the Australian Securities Exchange.

“Donaco International Limited advises that Cambodian local authorities have declared the temporary closure of all casinos in the Banteay Meanchey Province to prevent the curb in COVID-19 community outbreak following a surge in cases. All casino operations in the province have been temporarily suspended from 27 April 2021.”

“As such, Donaco’s Star Vegas has temporarily closed its operations until further notice from the local Government. The continued safety of Donaco’s staff and visitors remains paramount, and the Company will monitor developments and advise the market once there is a further update.”

Donaco Sees Revenue Drop 53.8%

The latest financial update from Donaco makes miserable reading. Net revenue fell from $10.79 million in the first quarter of 2020 to only $2.77 million. Donaco enjoyed net revenue of $6 million in the fourth quarter of 2020 alone. Most of the decline fell at Star Vegas’ door.

Operating expenses at the Donaco Star Vegas fell from $7.61 million to $1.31 million due to enforced closures and a lack of customers. Star Vegas enjoyed an average of 2,584 customers per day in the first quarter of 2020. Only 290 players, on average, visited Star Vegas in Q1 2021.

The story is similar when talking about the Donaco Aristo International Hotel in Vietnam. It is operating on a limited basis and has been since reopening in May 2020. Average daily visitors fell from 171 to only 15, with net revenue falling from $2.64 million to $0.26 million.

Figures reveal Donaco received $52.6 million as part of a Star Vegas settlement. The casino operator sought $190 million in damages from Thai vendors in Singapore over a disputed 50-year land lease deal. The settlement paves the way for Thai vendors to continue gaming operations at nearby Star Paradise.

Paying back a significant portion of its debt to Mega Bank is another positive for Donaco. It paid back $121.28 million, leaving $10.26 million outstanding. This is a far cry from the $131.54 the company initially borrowed.

Non-Executive Chairman Porntat Amatavivadhana Speaks out

Donaco Non-Executive Chairman, Porntat Amatavivadhana, explained the challenges his company faces.

“The March quarter was a challenging period due to the COVID-19 pandemic, with the outbreak in January leading to a more severe outbreak in April. This is an external factor which, unfortunately, we cannot control. Nonetheless, we have continued to focus on what we can control, our internal operations, and protecting our balance sheet. We have done everything to manage what had to be managed internally within the business. We keep a conservative approach, and we are ready to move forward once external conditions improve.”

“Encouragingly, we are also on track to repay all remaining debt with Mega Bank by this coming 30 June, and we continue to explore additional opportunities to access the gaming market.”

Donaco investors reacted negatively to the latest figures, which resulted in the share price sliding. Shares traded at $0.0640 on April 30 but are currently available at $0.0540.

The company has not made an annual profit since 2017, when it was $30.99 million. It has lost $124.51 million, $198.01 million, and $58.89 million since. It is improbable Donaco will show a profit in its 2021 figures either.