Performance review
Golden World Holdings' 2021 performance exceeded our expectations
Golden World Holdings released operating data for 2021: Total revenue recorded $226 million (down 74% year over year, down 87% from 2019), including total gaming revenue of $223 million (down 74% year over year, down 87% from 2019) and $2.36 million in non-gaming revenue (down 74% year over year, down 93% from 2019). EBITDA recorded $15.57 million (down 94% year over year, down 98% from 2019), exceeding our expectations of $11.23 million, mainly due to the recovery driven by the higher-profit midfield business since the company's gaming business resumed operations on September 15, 2021, which effectively mitigated the adverse effects of the suspension of operations from March to September after the outbreak of the epidemic.
Development trends
Since Cambodia lifted the 14-day quarantine policy for fully vaccinated visitors on November 15, 2021, the total number of visitors has shown continuous monthly growth. In November and December 2021, the total number of visitors to Cambodia increased by 48% and 75% month-on-month, and reached a peak of 33,129 since the outbreak of the epidemic in 2020 in December. The recovery in visitor numbers was mainly driven by Southeast Asian countries. We believe that the strong recovery in the number of visitors to Cambodia may continue into 2022, as Cambodia and other Southeast Asian countries are easing travel restrictions one after another.
In December 2021, the average number of daily orders placed in the midfield table business and slot machine business rose to $2.7 million (returning to 59% of the 4Q19 level) and $5.4 million (recovering to 70% of the 4Q19 level), respectively. According to company management, the recovery trend in purchase orders continued from 4Q21 to January 2022. Among them, the average number of daily orders placed in the mid-market table business rose further to $2.9 million in January 2022. We believe that the recovery trend driven by midmarket business may continue into 2022, in line with the recovery in the number of visitors to Cambodia.
Profit forecasting and valuation
Based on the current recovery trend unchanged, we keep our revenue and EBITDA forecasts unchanged for 2022 and 2023. We maintained our outperforming industry rating and maintained a target price of HK$8.80, corresponding to 11x 2023EEV/EBITDA. The current stock price is HK$6.63, corresponding to 8.2x 2023e EV/EBITDA; our target price has 32.7% upside from the current stock price.
risks
Uncertainty about the construction of the Naga3 project; uncertainty about the recurrence of the epidemic; the release of Naga2 was slower than expected.