Moody’s Ratings recently upgraded NagaCorp’s outlook from negative to stable following significant developments in the company’s financial position. NagaCorp, the operator of NagaWorld in Phnom Penh, Cambodia’s largest integrated resort, has successfully secured liquidity to fully address its upcoming $472 million USD bond maturing in July 2024. This strategic move has alleviated refinancing concerns, bolstering investor confidence in the company’s financial stability.
Financial Resilience
The shift in Moody’s outlook reflects NagaCorp’s proactive measures to mitigate financial risks. Notably, the company secured a $70 million USD loan from a major shareholder, the Chen family, bolstering its liquidity profile. Over the past year, NagaCorp has bolstered its cash reserves by reducing discretionary spending and opting for scrip dividends instead of cash payouts. These efforts have collectively strengthened the company’s liquidity position since 2022, providing a solid foundation for navigating future financial challenges.
Debt and Operational Forecast
Following the repayment of its $472 million USD bond, Moody’s estimates NagaCorp’s total debt, including lease liabilities, will stand around $120 million USD. Meanwhile, the company anticipates an improvement in EBITDA from its integrated resort operations, projecting figures between $320 million USD and $370 million USD over the next 18 months. This represents a recovery trajectory from 2023 levels, albeit still below the pre-pandemic highs of 2019.
Sectoral Challenges and Competitive Landscape
Despite these positive developments, NagaCorp continues to face challenges within the broader regional gaming landscape. The collapse of the Chinese junket industry has had enduring implications for gaming operators across Asia, including NagaCorp. Furthermore, the company remains exposed to competitive pressures from other emerging gaming destinations in the region. Moody’s underscores a slower recovery trajectory compared to its peers, reflective of ongoing structural shifts in the sector.
Moody’s outlook upgrade for NagaCorp underscores the company’s successful management of financial risks and strengthened liquidity position. While challenges persist, particularly in the context of regional gaming dynamics and sector-specific shifts, NagaCorp’s strategic initiatives and financial prudence provide a robust foundation for sustained growth and resilience moving forward.