Naga Corporation Possible $470M Bond Refinance
Brokerage Morgan Stanley Asia Ltd said it expects casino operator Nagakov to be able to “borrow” $470 million in bond issuance due in July 2024.
“As of the end of the first half of 2023, [Nagakov’s] cash was $242 million and half $86 million,” analysts Gareth Leung and Pravin Chaudhary wrote in a recent note.
Nagakov owns a long-lived exclusive casino license in Phnom Penh, Cambodia’s capital, and runs the Nagaworld resort complex (pictured).
Nagakov on Wednesday reported net income of $83 million in the first half of 2023, up 57.4% from a year ago. The group’s first-half earnings (EBITDA) before interest, taxation, depreciation and amortization were $143.2 million, 10.1% higher than the same period last year.
Group overall sales for the six months to June 30 were up 9.8% year-over-year, slightly above $263 million.
According to Morgan Stanley’s team, the casino company’s planned capital expenditure is “US$60 million in the second half of 2023 and US$20 million in the first half of 2024.
“In Q2 2023 EBITDA execution, Nagakov generates free cash flow to equity of approximately $50 million per quarter,” they added. “We think we could roll over from $50 million to $100 million of the bonds.”
Nagakov’s net debt was approximately $28.6 million as of the end of June. “The Company is confident that it will be able to fulfill all its financial obligations when senior bonds mature in July 2024,” it said in its first-half earnings release.
In June, Moody’s downgraded Nagakov’s corporate family rating to “B3” from “B2”. “The downgrade and negative outlook reflects Nagakov’s lack of refinancing progress on $472 million U.S. dollar bonds due in July 2024,” the rating agency said at the time.
“As the financial overhang is removed, Nagakov’s stock will “trade fundamentally,”” Morgan Stanley analysts said.
“Depending on our 8-fold average long-term enterprise value (EV) versus EBITDA and our utilization rate in the second quarter of 2023, the company has a $2.7 billion EV and $2.48 billion market cap, which is currently below our $2.65 billion market cap,” the analysts said.
Nagakov lowered its commitment to capital expenditure as construction of Naga 3 added to the Naga World Games complex was delayed by four years. The company said it was “considering options” regarding completion of the project, including the possibility of scaling the expansion project.
Nagakov’s management said during a press briefing on Thursday that Naga 3 is likely to open in phases, with podiums expected to be the first to be operational.
BY: 바카라사이트 추천