NAGAGROUP - 14 Mar 2021 (HKD 10.46)

 Naga Group Financial Result

Looking at the financial highlight, we can see that Nagagroup is performing extremely well in the past few years. With opening of Naga 2 in year 2017, it boost up the revenue to 1.8billion from 531million in year 2016. In year 2019, it also declared 65.72 cents dividend. 

Year 2020 performance 

For 2020, Q1 operated as normal but Cambodia government ceased all the gaming operation starting 1 Apr 2020 and reopening on 4 July 2020. And the company operated as normal since the reopening . Company also announced HKD 16.82 dividend for year 2020. 

Despite impacted by Covid-19, company still able to generate revenue and maintain profitability. Revenue has dropped 50 percent from 1.8 bil to 878million and the profit dropped 70 percent from 571mil to 165mil. From the income statement, we can see that company didn't retrench or have any cost cutting on the employee due to administrative expenses remain the same. 

From here, we can see that the debt is still manageable. Senior notes roughly 600million deduct cash  400 millions, is roughly 200millions in debt. 

Segmentation

As usual, gaming table brought the most revenue to the company. 

Future development

1) Naga 3 - target completion is on 2025

2) Investment Project in Vladivostok , Russia  - Operate in 2022

3) Angkor Lake of Wonder (“ALOW”) - in discussion stage

My thought - 

Covid-19 will be past tense sooner or later. I guess recovery sector such as Nagacorp will be booming once all the country lifted the travel restriction. Company showing steadily growth over the year and it shows that management teams are reliable. 

Price - 10.46. 

Est EPS - HKD 0.77 (USD 0.10 = HKD0.77, 2020 USD 0.0236 and 2019 USD 0.1201)

Est P/E - 13.58 

Est Dividend - 0.5 (4.7%)

2017 - 2019 ROE >20

Once recovered, with this price is consider undervalue.