RGB to grow gaming concession business


GEORGETOWN: RGB International Bhd is pressing ahead with the expansion of its gaming machine concession business overseas, albeit at a reduced budget this year after a capital-raising plan was put on hold due to tough market conditions.

The company had earlier planned to spin off its gaming machine leasing unit in Hong Kong.

“We need to wait for a conducive environment to implement our initial public offering plans in Hong Kong,” group managing director Datuk Chuah Kim Seah told StarBiz.

Chuah, in October last year, was reported to have said that the company is exploring a possible spinoff of its technical support and management (TSM) division.

The company’s machine leasing business is housed under this division.

But despite the fund-raising setback, the company has allocated US$20mil (RM82mil) to secure new machines for its concession programme this year. In 2018, the budget was US$25mil.

This year, RGB is targeting to install an additional 1,770 gaming machines across Asia, of which 1,300 units are earmarked for the Philippines market.

“In the Philippines, some 600 gaming machines have already been installed in the casino according to the terms and conditions of the contract,” Chuah said.

The remaining units will be installed by end-July.

“These 1,300 machines would generate a yield of at least US$50mil for the group over the next five years,” Chuah said.

The group’s business in the Philippines contributes over 60% of its annual revenue.

In Cambodia, RGB will install another 280 machines this year. This will give a return of at least US$10mil over the next five years.

“About 200 machines are for an expansion project. The remaining 80 machines will be used in a new casino,” Chuah said.

In Timor Leste, RGB is targeting to install 100 new machines that are projected to generate an income of US$1mil a year for the next five years.

The group is also expanding its business in Vietnam.

“In Hanoi, we have just been awarded a management contract for five years starting May 2019 to provide management of an existing club with 130 machines that would generate a profit of US$1.5mil a year for the next five years,” Chuah said.

RGB posted a net profit of RM35.17mil in the financial year ended Dec 31, 2018 on a revenue of RM379mil.

The other key part of the group’s business is the sales, services and marketing (SSM) division.

Chuah said the group expects to sell 1,600 new slot machines this year. “The new machines are for the markets in the Asean region,” he said.

Meanwhile, the group is also looking at opportunities to enter the Myanmar market. News reports have suggested that Myanmar is set to approve in May a bill that would allow for the setting up of foreign-only casinos in the country.

“We are studying the market now, as we have already received enquiries from potential casino operators in Myanmar,” Chuah said.

On the Latin and South American market, RGB is fine-tuning its gaming machines to comply with the requirements of the casinos.

“Our Latin and South American partners are helping us to penetrate into the markets in Panama and Mexico.

“It is a huge market, as there are now about 60,000 gaming machines in operation in the region,” he said.


   

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