Donaco’s Lao Cai shows strong potential, shrugs off tension

    Donaco International’s new luxury resort at Lao Cai in northern Vietnam is enjoying good visitation and table revenue despite the unrest in the country that has targeted Chinese, Bank of America/Merrill Lynch said in its weekly gaming round up.
    The investment firm reiterated its buy rating on Australia-listed Donaco and said there is scope for “significant mid-term upgrades.” However, it warned that the Vietnam, China tensions may create volatility in the short term.
    The Aristo Hotel held its soft opening on May 18th and is scheduled to be fully operational later this year.
    BofA said Donaco shares have slipped of late on concern over the situation in Vietnam and are now at “undemanding” valuations given the outlook for 17 percent compound average growth rates in its earnings per share from 2015 to 2017.
    Donaco has the right to operate a maximum of 50 gaming tables in Vietnam with a gaming license until 2044. The casino has 428 hotel rooms, permission for 150 slots and 150 electronic table games.
    According to a recent company presentation, the property gets 90 percent of its revenue from VIPs, with the majority from the neighbouring Chinese province of Yunnan.
    The company said that it has beefed up security at the property following the wave of anti-Chinese protests and riots across Vietnam, but has not had any problems.