MQ Technology enters Cambodia casino market

Ace Market firm said to be in joint venture to develop gaming resort

ACE Market-listed MQ Technology Bhd (MQTech) is venturing into the nascent Cambodia casino market in a joint venture to develop a gaming resort and theme park in the country, sources tell StarBizWeek.

The company is said to be partnering with a local partner named Cambodian Resorts and Entertainment Co Ltd (CRE) for the venture. The resort project is situated in Banteay Chakrey in Prey Veng Province, which is located in the southeast of Cambodia close to the Vietnam border.

“The project will see the construction of a resort and entertainment complex comprising of a hotel , casino, and a theme park, among others.

“CRE is the owner of the project land and has a sister company which holds a casino license to operate on this land,” says a source familiar with the matter.

While the cost of the hotel and theme park was not disclosed, the resort and entertainment project would include development of serviced apartments in several phases with a gross development value of more than US$30mil (RM132mil) as part of the joint venture agreement, he added.

Under the agreement, CRE will contribute the land for the buildings and facilities to be set up. It will also maintain the validity of casino licenses and business operation permit throughout the tenure of the venture.

Meanwhile, a unit of MQTech will finance the setup of a theme park as well as the building of serviced apartments on the land.

The source refused to disclose if Cambodian casino giant NagaCorp Ltd is involved in the project as an interested party. However, he pointed out that the joint venture company will seek a local casino operator to manage the gaming business for the project.

It is interesting to note that the proposed site, covering an area of about five hectares, is located about 100 kilometres from Pnomh Penh’s city centre.

The Cambodian government had awarded NagaCorp a 41-year monopoly on casino operations within a 200-kilometre radius of Pnomh Penh which runs until 2035.

NagaCorp, which is listed in Hong Kong and headed by low-profile Malaysian billionaire gaming tycoon Tan Sri Dr Chen Lip Keong, is a dominant presence in the booming Cambodian gaming industry which generated total revenue of US$2bil in 2015.

Frontier casino markets such as Cambodia and Vietnam has seen a huge increase in foreign visitors and gaming revenues in recent times, owing to the increased scrutiny by Chinese gaming authorities in Macau which led many high-rollers to seek other gaming spots in Southeast Asia.

Off-limits to locals, Cambodia’s casinos are scattered across the country. NagaCorp’s NagaWorld Resort and Entertainment Complex is the sole casino in Pnomh Penh while smaller operations can be found near the border such as in Sihanoukville and Bavet.

The resultant increase in foreign visitors to these casinos has been a boon for the gaming companies and the Cambodian government whose gaming tax earnings have grown by double-digit percentages over the past few years.

Malaysian companies have also gained a foothold in the region’s gaming markets. In March, a company called SV International Sdn Bhd was granted permission by the government to develop casinos, online casinos and hotels in Sihanoukville.

Another company, RGB International Bhd, a supplier of gaming machines, has been in Cambodia for over a decade and has a growing presence in other frontier markets such as Vietnam and Laos.

New direction

MQTech’s shares have attracted new trading interest in recent weeks and at one point rose to a six-month high of 15 sen on Oct 28.

On Friday, the shares rose 15% to close at 11 sen, or a 1.5 sen increase from the previous day’s close.

On Dec 8, the company announced that it had appointed Robbie Hari Krishnan Tatparanandam as an executive director.

Robbie, who is a nephew of renowned tycoon T Ananda Krishnan, is presently an executive producer with Astro and is focused on branded and content development.

MQTech, which has reported meagre earnings over the past few years, is primarily involved in the provision of high precision mould making, magnetic coils for hard disk drives and other services.

Its largest shareholder is Goh Boon Soo with a 24.83% stake. Goh is not part of the management team of MQTech or its board of directors.

For the nine months ended Sept 30 (9MFY16), the company reported a net loss of RM2.55mil on the back of RM12.54mil in revenue. As at Dec 9, its market capitalisation amounted to a modest RM45.62 mil.

It is worth noting that as part of its business diversification efforts, the company is also in the midst of developing a theme park in Malacca.

It had recently completed a new round of fundraising via a rights issue with free warrants which raised RM27.53mil in proceeds.

From this, RM15.9mil will be used to subscribe to a 51% stake in a joint-venture for a theme park project in Pantai Klebang, Malacca.

The development will be undertaken between MQTech’s wholly owned subsidiary Star Acres Sdn Bhd and Cash Support Sdn Bhd.

According to previous exchange filings, the theme park, to be known as Malacca Explorer Resort - Dive Park Zone, is to be designed and developed by the Sanderson Group, a well-known Australian leisure park builder.