Entertainment Gaming's CEO Discusses Q4 2011 Results - Earnings Call Transcript

| About: Entertainment Gaming (EGT)

Entertainment Gaming Asia, Inc. (NYSEMKT:EGT)

Q4 2011 Earnings Conference Call

March 8, 2012 8:30 AM ET

Executives

Traci Mangini – Senior Vice President, Corporate Finance

Clarence Chung – Chairman and Chief Executive Officer

Andy Tsui – Chief Accounting Officer

Analysts

Paul Sonz – Sonz Partners

Jim Crabbe – Private Investor

Operator

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2011 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session.

At that time, if you have a question, please press the one followed by the four in your telephone. If at any time during the conference you need to reach an operator, please press star zero.

As a reminder, this conference is being recoded today, Thursday, March 8, 2012. It is now my pleasure to turn the conference over to Traci Mangini. Please go ahead.

Traci Mangini

Thank you Sharon [ph]. Good morning everyone. My name is Traci Mangini, Senior Vice President of Corporate Finance for Entertainment Gaming Asia. With me today on the call, are Clarence Chung, our Chairman and Chief Executive Office, and Andy Tsui out Chief Accounting Officer.

Now before we begin, please let me review the safe harbor statement.

Some of the statements that the company will make on this conference call such as statements of the company’s plans and expectations are forward-looking. While forward-looking statements reflect the company’s good faith beliefs, they are not guarantees of future performance and do involve risks and uncertainties.

The company’s actual results could differ materially from those discussed on this phone call. Some of these risks and uncertainties are described in today’s news announcement and in the company’s filings with the Securities and Exchange Commission including the company’s reports on forms 8-K, 10-K and 10-Q.

Entertainment Gaming assumes no obligation to publicly update or revise any forward-looking statements.

Now, the agenda for today’s call will be as follows; first, Clarence will discuss the highlights of our 2011 fiscal year financial performance and corporate developments. Following that, Andy will review in more detail our financial results for the fourth quarter.

Clarence will then conclude our prepared remarks with an update on our growth plans for our gaming operations. We would then be very pleased to take your questions. With that, let me turn the call over to Clarence Chung. Clarence?

Clarence Chung

Thank you Traci, and good morning everyone. I’m pleased to report that 2011 was the most strong year for Entertainment Gaming Asia. It was not only a year of record-breaking financial performance, but also marked out third consecutive year of strong earnings growth since this new management team began implementing restructuring efforts in the fourth quarter of 2008.

We have come along way in the last three years. Our restructuring in East Asia has resulted in a more refined business model and substantially improve our operating efficient and financial profitability.

This is clearly evident in our financial performance. In the last three years, we have increased gaming revenue at a compound annual growth rate of 72% driven by consistent strong improvement in consolidated annual average net wins which reached 140 for the 2011 fiscal year.

Loan [ph] adjusted EBITDA from just 140,000 in 2009 to $11.7 million in 2011. And dramatically improved out bottom line having attained net profitability for the first time ever in the company’s history in 2011, compared to a net loss of $27 million in 2008.

We are very proud of these results, and believe they clearly demonstrate the successful turnaround of the company.

Let me now share with you, some of the specific highlights for 2011. Consolidated revenue was $27.1 million, up 22% from 2010 and was a record high for the company.

This growth was driven by both our gaming and other products divisions. Gaming participation revenue was $17.4 million, up 22% from 2010, and was primarily driven by strong performance at operations at NagaWorld in Cambodia.

Average consolidate net win was $140 for 2011, an increase of 20% from 2010. Both our operations at NagaWorld and in the Philippines post strong gains in average net win during the year.

NagaWorld’s net wins improved 15% to $232. As we benefit from our proactive machine management and target this marketing initiated. The positive growth trends has continued so far this year with net wins at NagaWorld reaching $246 in January and $254 in February of 2012.

In the Philippines, our strategic efforts to maximize performance in these markets are beginning to pay off, particularly in recent months.

These efforts includes strategic management of machine placement, and targeted marketing focused on our most promising venues in these market.

This has resulted in average net win growth of 10% to $53 for 2011 and levels has continued to climb reaching $71 in January and 77 in February of 2012. In addition to the strong performance of our gaming operation, our other product divisions meaningfully contributed to revenue.

East division was up 23% from last year due to higher sales volume for existing costumers for automotive component and marked improvement in our gaming chips and plaques sales.

As a result of higher customer re-orders and the addition of new customers. With strong revenue gains and a continued focus on cost control, we post record high adjusted EBITDA of $11.7 million for 2011, up an impressive 41% from the prior year.

Net income was 642,000 for the year, marking the first time in the company’s history to achieve a new net profit.

This result includes a non-cash impairment charge of $1.4 million related to machine inventory which Andy will discuss in a moment.

However, it is worth noting that excluding this non-cash charge, net income would have been $2 million. Our much improved ability to generate cash flows allows us to grow our cash positions by $2.6 million during the year ending 2011 with $12.8 million.

We did this while making investment in our gaming growth strategy and improving our balance sheet by reducing our debt by merely one-third. We have achieved this strong performance while remaining focused on – and investing in our future growth plan.

This includes expanding our gaming operations in our target market of Indo-China, through the development of our first two Casino projects, and a new participation and management contract with the leading Hotelier in Cambodia.

We will talk more about this exciting trends in a moment, but first, I would like to turn the call over to Andy to discuss the details of our fourth quarter financial results. Andy?

Andy Tsui

Thank you, Clarence, and good morning everyone. Before we discuss detail of the fourth quarter 2011 financial results, I would like to remind investors that beginning 2011, we reclassified our reporting, operating segments into two divisions, gaming operations; which include our gaming participation business, and future casino operations, and other product which consists of our Dolphin Operating division, formerly called table games and non-gaming products.

These changes do not reflect any change in focus of the company, and all new reporting segment information has been applied retroactively to all periods discussed.

Total revenue for the fourth quarter of 2011 was $7.7 million, up 25% compared to $6.1 million in the fourth quarter of 2010. The increase in revenue was the result of significant improvement in both our gaming and other product business divisions.

Gaming participation revenue was 4.3 million for the fourth quarter of 2011, up 12% compared to $3.8 million in the fourth quarter of 2010, driven by strong improvement in average net win on our machines.

Consolidated average net win per unit for the quarter improved to $136 up 14% from $119 in the fourth quarter of 2010. Average net win per day figures exclude EGMs operating in a venue doing its soft launch if applicable.

For the fourth quarter of 2011, 60 seats was included from the net win calculation. Were these seats included in the calculations, average consolidated net win per day for this period would have been $132.

Our install base of electronic gaming machine seating operation as of December 31, 2011 was 1,477 seats down 5% from December 31, 2010. The decline was principally the result of a venue closure and machine movement within the Philippine market as part of the company’s ongoing effort to improve returns in this market.

Gaming participation revenue from Cambodia which consists primarily of our operation at NagaWorld, increased to approximately $3.3 million of the fourth quarter of 2011, up 14% from $2.9 million in the fourth quarter of 2010 reflecting strong average net win per unit as slightly higher machine count.

Average net win per unit in Cambodia was 219 for the fourth quarter of 2011, up 11% from 197 in the fourth quarter of 2010, our install base of machine seating operation in Cambodia as of December 31, 2011 was 719 seats up from 680 seats as of December 31, 2010 representing an increase of 6% from 680 seats as of December 31, 2010.

The December 31, 2011 machines count includes 60 seats at one venue doing a soft open period while the venue owners complete constructions.

This brand new house grand opening in January of 2012. In the Philippines, gaming participation revenue for the fourth quarter of 2011 was approximately 965,000 up 8% from the fourth quarter of 2010 level of 896,000.

The increase in the fourth quarter of 2011 revenue was primarily due to improved average net wins and the higher overall revenue sharing due to our October 2011 agreement to increase revenue sharing at this (inaudible).

This improvement was despite the April closure of one venue by the owner with approximately 120 EGM seats as well as deferred revenue recognition from one venue with 86 EGM seats as the collection from this revenue is not yet reasonably assured.

With regard to the venue closure last April, we have redeployed approximately one-third of these gaming machine to be used in our operation in Cambodia.

We continue to explore opportunity to deploy the remaining machines from this closed venue.

With regard to the venue for which we are recognizing revenue on a cash basis, we remain engaged in discussion with the venue owner in order to reach an amicable solutions that will allow us to resume regular recognition on accrual basis.

Average net win for the Philippines was $64 for the fourth quarter of 2011, up 10% from $58 in the fourth quarter of 2010. The increase was driven in part by our effort to strategically manage the machine placements.

Our targeted marketing initiative and extended hours at our most promising venue. Our install base machine seating operation in the Philippines was 758 seats as of December 31, 2011, a decrease of 13% from 867 seats as of December 31st 2010.

The decrease was primarily the result of the closure of the venue – of the one of the venue I mentioned about.

Our other product division namely the manufacture and sales gaming – products, and non-gaming products such as automotive component contribute approximately $3.4 million for the quarter, up 47% from $2.3 million in a year ago period triggered primarily by significant higher gaming chips and plaques sales due to higher level of customer re-order and the addition of new customers.

Cash based SG&A expenses for the fourth quarter of 2011 was 2 million, up from 1.6 million in the prior period – prior year period due to higher legal expenses related to our casino development projects, higher selling and reduced expenses as well the E&M [ph] accruals.

Adjusted EBITDA which we define as earning before interest taxes depreciation amortization and non-cash expenses was 2.6 million for the fourth quarter of 2011 which compare to $2.5 million in the fourth quarter of 2010.

Our consolidated net loss for the fourth quarter of 2011 was 1 million or $0.01 per share. This compared to a net loss for a quarter of 2010 of 2.7 million or $0.02 per share.

As Clarence mentioned, the fourth quarter of 2011 net loss include a 1.4 million non-cash impairment charge as of December 31, 2011. This was associated with our annual impairment review and result in a wipe our of certain gaming machine and system in inventory as well as the infrastructure cost related to closure of one venue in the Philippines during the 2011 fiscal year.

Excluding this non-cash charge, we quote a net profit of 346,000 for the quarter. This compared to a net loss of 2.7 million or $0.02 per share for the fourth quarter of 2010, the fourth quarter of 2010 net loss include a non-cash impairment charges of 3.2 million related to a write down of certain Dolphin intangible and success.

It also include a significant one-time tax gain of 800,000 excluding both these item we record a net loss of 322,000 for the fourth quarter of 2010.

Turning to the balance sheet, as of December 31, 2011 we have a total of $12.8 million in cash and cash equivalent. This compared to $10.2 million as of December 31, 2010, the increase in cash balance was the result of strong cash growth from gaming participation operation partially offset by Cap Expenditure for our casino development projects, gaming machine purchases, to enhance our participation business operation, and principal interest debt repayment.

We have 6.2 million in debt as of December 31, 2011. This debt is held in a form of an unsecured promissory note issued to a largest shareholder ETT Entertainment Holding Limited, a wholly owned subsidiary of Nelco International. According to the terms of the notes, we began making principal interest payments in July 2011. Monthly payments are approximately $530,000 and will continue through December 2012 at which time the notes will be repaid in full.

And we become to be debt free.

I will not turn the call back over to Clarence to discuss our casino development plans. Clarence?

Clarence Chung

Thank you, Andy. With meaningful recurring cash flows on operations, a strengthening balance sheet and efficient operation structure, we believe we have established a solid base on which to invest in our existing operations and to expand our gaming operations in the high potential market of Indo-China.

This included the development and operations of our own regional style casinos operated under our Dreamworld brand.

Before we discuss our casino development plan, I would like to give an update on the development for our gaming machine participations and gaming chips and plaques operation that we believe will contribute to our long term growth.

As you may know, in November 2011, we entered into a gaming machine participation and management agreement with Soca [ph] Hotel and Resort to place 250 electronic gaming machine seats, and jointly manage this slot operation in the Thansur Bokor Resort and Casino in the Bokor Mountains of Cambodia.

Soca, a wholly owned subsidiary of the Cambodian (inaudible) is the leading operator of luxury hotels and resort in prime locations in Cambodia. The Thansur Bokor Resort and Casino is located in the highly traffic tourist area of the Bokor Moutains in the Kampot provice of Cambodia.

It will be the only casino in the nearby area for the present time catering primary to tourists. The first phase of Thansur Bokor will include over 650 hotel rooms and suits, main parks and amenity and convention facility.

It is expected to open in April 2012, will have two transferred EGM seats in operation at the time of the opening, and expect to ramp up to 250 seats over the subsequent several months.

Under the term of the agreement, we will be the exclusive provider of the EGM in the ground floor slot are of Thansur Bokor and would be jointly managed with Soca, these slot operations.

We and Soca will share the gross win and certain operating expenses on the respective basis of 27%-73%.

The company will collect its share of the gross win on a bi-monthly basis and will settle a share of the operating cost on a monthly basis.

The contract duration is five years, commencing a – live operations of the fourth floor. We have already secured the necessary 200 machines, some of which have been purchased, and others sourced from our existing inventory.

The total capital expenditure for this project are approximately $2 million. We are pleased to work with such a prominent partner as Soca to manage the slot operations in Thansur Bokor and to have the opportunity to expand this relationship to its other prestigious properties.

We believe this agreement offers strategic benefits by not only expanding our presence in the Indo-China region, and demonstration our operational expertise, but also by contributing to near-term earnings and long-term growth.

Further, given Thansur Bokor is a destinations resort catering primary to tourists, and it’s approximately 1.5 hours by car from our Kampot’s border casino project, we believe this is an attractive complement to our gaming operations in Cambodia.

As for our gaming chips and plaque, we continue to focus on driving continuous improvement in the financial performance of this division.

Through our on-going investment and product development, we are working to expand our product offering to include new styles of chips and even more innovative state of the art security features.

Further, we’ll be investing in our manufacturing facilities which would expand our production capacity and increase operation efficiencies in automation. We believe that this, along with our targeted marketing programs will further strengthen our existing customer relationships in our core market of Australia and Macau, and broaden our customer base in current and new geographies.

This programs are already beginning to provide benefits with quality customer reorders booked in the fourth quarter of 2011 and the recent acquisitions of several new customers including one in the Indo-China region and one in Macau.

Now we’d like to conclude with an update of our casino development plan. Currently, we have two such casino project under development, the Pailin project, and the Kampot project.

These casino projects are strategically located in Indo-China and provides us the ability to expand and grow with market demand. Our Pailin project is located on a growing trade route and boarder crossings with Thailand. The initial phase of the Pailin project will consist of a casino with an estimated 23 table games and 40 gaming machine seats.

We will own the projects which is being developed on properties base from a local land owner, we’ll have exclusive management right and control over the development and operations of the casino. And we and the land owner will share in the profit before depreciation and land lease expense on a 80%-20% basis respectively.

In December, we commence constructions on these projects and the exterior, and the external structure is now essentially complete. We are preparing to begin work on the interior.

Based on our swift process, we are pleased to announce that the grand opening for the Dreamworld Casino Pailin will be held on May 9, 2012.

We have hired Robin Humphries – gaming operator with several decades of gaming operations and management experience in other – management.

Robin previously worked at a number of gaming companies including other Cambodian boarder casinos and has already begun training the casino staff at all levels. Our Kampot project is locate in the Kampot province of Cambodia near the Vietnam boarder.

The initial phase of the casino is expected to include up to 14 table games and 25 EGM seats. The Kampot project will be developed under joint venture company owned by us, and a local land owner which owns the property upon which the casino will be built.

The local partner will contribute the land, and we will have exclusive management right and control over the development and operations of the casino, as well as management in both in control over the joint venture company.

We and the local partner will share the net revenue of the joint venture which is the total gross revenue of the casino less any paydowns to customers, operating expenses and taxes on a 60-40 basis, respectively. We have completed the landfill process and housed the groundbreaking ceremony for the Kampot project.

Having focused our resources on expediting the Pailin project, we now anticipate beginning construction on the Kampot project his month. Based on the current project timeline, we expect the initial phase of the casino to open in the third quarter in 2012.

In summary, we have solid recurring cash flow and improved financial flexibility. We believe we have established a solid foundation for growth. We are excited about our plan to expand our gaming operations and depth. Our vision is to become an owner and operator of regional casinos in the emerging and dynamic markets of Indo-China. It’d soon to become a reality.

These first two casino projects were first [ph] to deepen our footprints and demonstrate our operational expertise in our market. Further, they represent unique steps towards achieving our long-term goal of determining a leading owner and operator of regional styled casinos in the emerging gaming market of Indo-China.

Let’s now open up the call to your questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And our first question is from Paul Sonz, Sonz Partners. Please go ahead.

Paul Sonz – Sonz Partners

Good morning. I noticed that the sequential quarterly numbers were down in the fourth quarter, then strongly up in the first two months of this year. I wondered if there are – is there a particularly reason that December sort of sell off?

Clarence Chung

Well, hi, Paul. Well, in fact, indeed, we noted not much seasonal effect. I think probably you’re referring, in particular, the Cambodian numbers, I would guess.

Paul Sonz – Sonz Partners

Yes, exactly.

Clarence Chung

Right. And in fact, well, indeed, we see this as normal ups and downs and indeed that the down is not, well, too dramatic. And we cover in January, even better numbers in February. So I would say it’s probably a normal fluctuation month to month.

Paul Sonz – Sonz Partners

Okay. Because I noticed that the January and February were very strong. I mean, what’s interesting is not just in Cambodia, but also in the Philippines, which is I think this is the first time we’ve seen such strong number in the Philippines for quite some time.

Clarence Chung

Yes, it is. That’s right.

Paul Sonz – Sonz Partners

I may have missed something. You may have said it, but I may have missed it. What was SG&A for the quarter?

Andy Tsui

Paul, this is Andy. The fourth quarter SG&A was $2 million.

Paul Sonz – Sonz Partners

And you probably said it, but I must admit that – what was the reason for the increase?

Andy Tsui

Well, it included additional legal and share [ph] expenses for the new project development, plus the somewhat other E&M [ph] accruals.

Paul Sonz – Sonz Partners

I see. Okay.

Clarence Chung

And, Paul, I would like to also – yeah, I will also like to supplement on this. Well, in this – the overall for the year, the average quarter is lower than $2 million. And I think, well, quite a major reason is also due to the normal year-end (inaudible) which still have been well for us throughout the year.

So, well, again, the $2 million would not be our new normal in terms of the SG&A. It should be – it would be lower than this number.

Paul Sonz – Sonz Partners

Right. But I would assume that the – I know that the SG&A, I think, got to $1 million down to $1.3 million. I’m assuming that with you increased development cost and we’ll bring legal expenses that the SG&A on an ongoing basis will probably be between $1.5 million and $2 million?

Clarence Chung

Yeah, I would say more – yeah. Obviously, between that, but I would probably – it should be, I would say, in the $1.5 million to $1.8 million. Well, obviously, you’re also subject to the expense operations, but it should be within the $1.8 million.

Paul Sonz – Sonz Partners

Okay. Have you made any – are there any more thoughts on – obviously, we have a gaming business and we have an automobile parts business in Dolphin. And I wondered; has there been any more thoughts on separating out the Dolphin automobile parts business or because the machinery is similar necessary for what you’re doing in the chip business?

Does it make sense to keep? Can you comment on that?

Clarence Chung

Well, again, I think the machines and the skill sets are quite similar, to be honest. Indeed, we have already moved away. Dolphin has already moved away from being an auto parts manufacturer to a value-adding plastic product manufacturer, which includes, well, obviously, the more high value auto part product, as well as gaming chips and plaques and other high-valued plastic products.

So we have already moved away from that and you can see, again, where we also put certain emphasis in terms of bringing up the automation, the expansions of the facilities to cater for the expanded sales and orders from the chips and the plaques, as well as other higher margin, higher valued plastic products.

So I see that this is a very good potential market, in particular, the gaming chips and the plaques area, whereby – or I think I mentioned previously that we are by far right now is at least in second in the supplying of gaming chips and plaques in the world. But then we hope to reach in that gap and narrow the gap, by continue improving ourselves. And we did see good progress in that respect.

Paul Sonz – Sonz Partners

Just a couple more questions. In the new casino that you hope to break ground this month, the opening, do you believe that it’ll be at the – more towards the beginning of Q3 or more towards the end of Q3? Is there any definition you can give us there?

Clarence Chung

I would say, well, to play fair, I would probably, well, put it closer to the end of Q3.

Paul Sonz – Sonz Partners

Okay. And then your new partner, they obviously have a bunch of hotels – they have a bunch of hotels in Cambodia. Is it realistic to expect that we will see additional agreements to run gaming machines in some of their other properties?

Clarence Chung

Well, we will expand – we will look at this and, obviously, indeed, we search (inaudible) but talk to them and trying to see whether or not good opportunities would come out. But until now, we don’t have any solid arrangement or agreement.

But, again, well, obviously, with our expertise and indeed that’s one of the reasons why they chose us to operate at (inaudible) as the operator. It’s due to our successful track record in the NagaWorld as well as our expertise and execution abilities. So, indeed, they sort of handed over to us in one of their most important investments portfolio within the hotel and resort portfolio.

Paul Sonz – Sonz Partners

By making this agreement with them, is that – would that in some way make it more difficult for you to do – provide similar services to other hotel operators?

Clarence Chung

Well, I don’t see – I don’t think both. In fact, well, indeed, no, I don’t think so.

Paul Sonz – Sonz Partners

Okay. And then, one, just last question. I know that you said that you added some additional customers for the chips. Could you tell us how many new customers that you added?

Clarence Chung

In fact, well, we are working on a couple of interesting projects with, well, quite many operators in Asia. But then, in particular, we at – two to three new customers to our total customer base in the second half of 2011. We are continuously progressing. Indeed, we are aiming also to the major operators in both – well, in either Macau or in other major Asia cities, which have casino operations.

So our R&D and our product development and, well, we are in active discussions with them and things are relatively promising.

Paul Sonz – Sonz Partners

And these new customers are not affiliated with our majority owner?

Clarence Chung

No.

Paul Sonz – Sonz Partners

Okay. Thank you very much.

Clarence Chung

Thank you, Paul.

Operator

And our next question is from Jim Crabbe. Please proceed.

Jim Crabbe – Private Investor

Good morning, Clarence and Andy and Traci. A couple of quick questions. Are you – right now, obviously, we’re just in a couple of countries. Are you looking at possible openings or possible casino operations or participation agreements elsewhere in Indo-China, outside of Cambodia?

And, number two, is there any way to equate – when you put in a certain number of tables and a certain number of machines, is there a fixed ratio that goes into most casinos about how many machines versus how many tables? And if so, what kind of – for that fixed ratio, is the table more profitable as a rule, not in one gaming machine, but in some number of gaming machines?

Like for example, we’ve got 23 tables and 40 gaming machines, I believe, going into Pailin. Where would you expect the majority of the revenue to come from?

Clarence Chung

Okay.

Jim Crabbe – Private Investor

Anyway, what I’m trying to do is get some kind of an idea of what your expectations are for how this business – how this business plan works.

Clarence Chung

Yeah.

Jim Crabbe – Private Investor

And so we can – when you announce a new facility with a number of tables and so on, what can we expect or what can we plug into a model that will give us some kind of a reasonable idea about the company’s gross rate and what’s going to happen.

Clarence Chung

Okay. No. Well, I think we are constantly also, well, looking at these questions. And indeed, therefore, new projects – well, obviously, we are looking at a – put it that way, we will not stop at here. In fact, what we have developed so far, as I mentioned many times before that we have developed our expertise in ground, local knowledge, as well as the local expertise and execution on the ground.

And indeed, we would like to leverage on it. So we are talking to, obviously, quite a number of new projects, large and small. And when the timing is right and mature, then obviously we would like to share with our shareholders more on these new projects.

So, in other words, we are talking to a bunch of new projects, which is a casino base or operations or participation project. And in terms of the ratio of tables and slots, in fact, there is no signs – well, we (inaudible) to it. Table games is the new area for EGT, in particular, but then, indeed, these are the tables we all know that is also very popular both in – for the Cambodian market and also we’re looking at NagaWorld.

There are a lot of Vietnamese tourists coming in working on the table games and on the slot machines. As well as there are more and more also Thai tourists coming into this. So we would look at individual casinos and its individual locations in terms of putting whether or not more tables or more slots as compared to the ratio.

So, for instance, in Pailin, we think that our target market would be more table games, plus, in fact, the receptiveness of slot machines is also good. That’s why we put a little bit more ratio in terms of the slot to tables in the Pailin than our plan in Kampot. And obviously, while we are relatively flexible to change the mix, if it turns out to be a little bit different or different from our expectation.

So we are also very attractable and, indeed, we can change that mix fairly easily. So, in terms of where the majority of the revenues would come from, I would guess, in particular, on the Pailin side, where initially it would be the table. And Kampot is also for the table. But we’re also trying to ramp up the slots area of the revenues.

Well, for the casino, we do think that the table games would be the primary source in the short term. But for instance, in other area like the Poipet, which is also Thailand and Cambodia, in fact, the slot machines there are doing very good, on top, as well as the table. So, indeed, it’s different markets. It’s also the advantages of us being – having the local knowledge. And then we can easily understand what the market needs in that particular location.

Jim Crabbe – Private Investor

Now, there was a word. You said Poipet?

Clarence Chung

Yeah.

Jim Crabbe – Private Investor

And you say that the slot machines do very well there. Did they do as well as they do, for example, in Phnom Penh, in NagaWorld? Or do you have any way of knowing that?

Clarence Chung

Well, obviously, there’s no formal statistics. But, in fact, from informal sources, not all, but some of the better operators, the numbers are as good in Phnom Penh.

Jim Crabbe – Private Investor

Thank you. Best of luck.

Clarence Chung

Thank you.

Jim Crabbe – Private Investor

Thanks.

Clarence Chung

Thank you.

Operator

And I’m showing no further questions at this time.

Clarence Chung

Thank you, operator. I would like to thank our shareholders for their ongoing support and we hope that you will continue to monitor our casino development progress on our company [ph] website, and look forward to updating you on our progress in the near future. Thank you.

Operator

Ladies and gentlemen, that does conclude the conference call for today, we thank you for your participation and ask that you please disconnect your lines.

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