Donaco Int’l records financial stability in Q2 2024; Thai casino legalisation a threat  

Donaco International Limited has expressed concerns about the potential impact of legalised casinos in Thailand on its Star Vegas casino, located near the Thai border in Poipet, Cambodia. The Thai government’s consideration of allowing casinos within large entertainment complexes could affect Donaco’s cross-border tourism and operations. As the ASX-listed company assesses this development, the possible changes in the regulatory landscape pose a significant threat to its business model.  

Financial results for the June 2024 quarter  

Despite these looming threats, Donaco reported a 57 percent year-on-year increase in group-wide revenue for the June 2024 quarter, reaching AUD10.8 million (€6.5 million). However, this represented a 15 percent decline from the previous quarter.  

The company reported that its group EBITDA also fell 24 percent from the March quarter to AUD6.34 million (€3.8 million). These fluctuations were primarily influenced by the performance of the VIP gaming segment at Star Vegas, where rolling chip turnover significantly decreased, despite an unusually high 10.82 percent VIP win rate.  

Tax issues at Aristo International Hotel  

In Vietnam, Donaco faces another challenge following a tax audit at its Aristo International Hotel near the Chinese border. The Vietnam General Department of Taxation has determined that unredeemed chips deposited by customers should be considered revenue, potentially leading to a tax payment of around $5.9 million (€5.4 million). Donaco is appealing this decision with the help of a local consultant, though the outcome remains uncertain.  

Performance and strategic outlook  

Despite these issues, Donaco’s operations at both Star Vegas and Aristo showed signs of stabilisation. Star Vegas recorded steady property-level EBITDA and net revenue figures, bolstered by a higher-than-usual VIP win rate and a focus on minimising operating expenses during periods of increased visitation. Similarly, Aristo experienced high visitation levels and a quarter-on-quarter increase in net revenue, although a slight rise in operating expenses impacted its property-level EBITDA.   Donaco’s non-executive chairman, Porntat Amatavivadhana, highlighted the company’s strong recovery post-COVID-19 and emphasised the importance of financial management and operational stability. He noted the positive influence of China’s border reopening on Aristo’s performance and expressed confidence in the property’s long-term potential, particularly with the anticipated opening of the new Sapa airport in 2025.   “Donaco has consistently reported robust financial and visitation numbers following stable quarters across our operations. In the period we’ve stabilised our operations and focus on providing a high-quality experience to our customers. This is evidenced by the improving average daily visitation across both Star Vegas and Aristo,” Amatavivadhana said. 

Future and challenges  

Looking forward, Donaco said it remains optimistic about its financial performance, driven by ongoing tourism campaigns and infrastructural developments. However, the company remains vigilant about potential disruptors, such as the legalisation of casinos in Thailand and the ongoing tax issues in Vietnam. 

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