Donaco International (ASX:DNA) posts positive earnings as coronavirus effects subside

• Donaco International (DNA) has revealed two strong months of earnings on the back end of the pandemic that ravaged the gaming and tourism industry
• The casino operator said the impacts of COVID-19 have started to subside, bringing the company back to positive earnings
• The company tabled positive earnings before interest, tax, depreciation, and amortisation (EBITDA) over October and November and says this trend is continuing in December
• Importantly, Donaco attributed the positive earnings as much to strategic initiatives from a new management team as the subsiding COVID effects
• The company appointed a new Non-Executive Chairman, Paul Porntat Amatavivadhana, and a new CEO, Lee Bug Huy, in early September
• Now, Donaco is working to pay off the last remaining portion of its debt to Taiwan-based Mega International Commercial Bank
• Shareholders reacted positively to today’s news, with shares up 26 per cent to 6.3 cents each this afternoon

Donaco International (DNA) has revealed two strong months of earnings on the back end of the pandemic that ravaged the gaming and tourism industry.

The casino operator said as the impacts of COVID-19 continue to subside, it has now delivered two consecutive months of earnings before interest, tax, depreciation, and amortisation (EBITDA) growth.

Specifically, Donaco said it tabled positive EBITDA of US$540,000 (around A$700,000) in October and US$800,000 (around A$1 million) in November. The company said this trend is continuing into December.

While the reopening of its Star Vegas Resort and Club in Cambodia in late-September certainly played in important part in the positive earnings, Donaco attributed its growth mostly to the strategies put in place by a fresh management team.

On September 2, the company announced it had appointed a new Non-Executive Chairman, Paul Porntat Amatavivadhana, and a new CEO, Lee Bug Huy. Together, the two leaders bring years of experience in managing listed companies and operating casinos to the table.

And, so far, the proof is in the pudding. Donaco told investors today the new leadership team has introduced a strategic shift in customer targeting and managed to reduce international staff expenses, providing a solid platform for growth.

These initiatives, combined with the gradual easing of COVID-19 restrictions in some key Donaco operating areas, mean the company has improved the position of its business.

What’s next?

Donaco said it is still busy paying down its debt to Mega International Commercial Bank, which is based in Taiwan. As it stands, Donaco still owes US$7.8 million (roughly $10 million) to the bank of the total US$100 million (roughly A$132 million) borrowed.

Still, perhaps most interestingly to investors, Donaco teased that it is proactively exploring “alternative options to access the gaming sector”. What these options might be remains unknown, but the company said it will update the market on any developments in due course.

Investors have reacted well to today’s update as Donaco kicks operations back off at its casino and edges closer towards debt freedom.

Shares in Donaco are up 26 per cent at $2:45 pm AEDT, trading at 6.3 cents each. The company has a $78 million market cap.