The current situation of the company
Gold World Holdings announced 1Q22 operating data: total gaming revenue was $110 million (down 14% year-on-year, up 28% month-on-month), of which VIP total gaming revenue was $33.12 million (down 59% year-on-year and 12% month-on-month), total midfield gaming revenue was $51.58 million (up 74% year-on-year, up 48%), and slot machine total gaming revenue was $25.21 million (up 47% year-on-year and 17% month-on-month). 1Q22EBITDA was $60.55 million (up 57% year-on-year and 83% month-on-month). Despite the recurrence of the 1Q22 outbreak, total gaming revenue grew for a consecutive quarter, mainly due to 1) the continuation of the midfield-led business recovery from 4Q21 to 1Q22 and 2) the strong recovery in visitor volume driven by Southeast Asian countries.
Comment
According to the announcement of the Ministry of Tourism of Cambodia, on March 17, the government cancelled the requirements for polymerase chain reaction (PCR) testing 72 hours before arrival and rapid testing after arrival, and the visa on arrival program also resumed for international visitors to Cambodia. In Southeast Asia, more countries such as Thailand, Malaysia and Vietnam have implemented or resumed quarantine-free travel policies for fully vaccinated tourists since the end of last year.
Since December 2021, the number of visitors to Cambodia has continuously recorded monthly growth. The number of visitors to Cambodia in January and February 2022 increased by 118 per cent and 145 per cent year-on-year, and reached its peak since the outbreak in early 2020 in February, mainly driven by Southeast Asian countries (130 per cent and 150 per cent year-on-year growth in January and February). We believe that as Cambodia and other Southeast Asian countries continue to relax travel restrictions, the recovery in visitor volume driven by Southeast Asian countries will continue in 2022.
The company announced the transfer of senior management on April 5. Among them, Tan Sri Dr. CHEN LipKeong, the founder of the company, was transferred from the chief executive to the senior chief executive; his three sons, Yufeng, Cherchi and Yiy Hwuan, appointed or transferred to the chief operating officer, the financial and financial chief executive and the hotel chief executive (collectively referred to as the chief executive); Zhang Jingwen was transferred from the director of capital corporate finance and investment to financial director; and Chen Shanzun was transferred from the financial director to the founder's office financial director.
In addition, according to the company's announcement on March 3, due to various uncertainties in the Russian development project, the company suspended the development of the project until the situation became clear.
Profit forecast and valuation
Based on the current recovery trend, we keep our income and EBITDA forecasts unchanged for 2022 and 2023. We maintain our outperform industry rating and maintain our target price of HK $8.80, corresponding to 11x 2023eEV/EBITDA. The current share price is HK $6.92, corresponding to 8.5 x 2023e EV/EBITDA;. Our target price has 27.2% upside over the current share price.
Risk
The uncertainty of Naga3 project construction; the uncertainty of epidemic recurrence; the amount of Naga2 is slower than expected.