Nagacorp Ltd, operator of the NagaWorld casino and hotel complex in Phnom Penh, exhibited strong revenue growth in the first quarter of the year and is expected to maintain this course through the end of the year, though at a slower pace, Citi Research said in its latest investor note on the Hong Kong-listed firm.

Citi analysts noted that NagaCorp’s reported gross gaming revenue (GGR) grew 35 per cent year-on-year in the first quarter of 2016 to $153.8 million, benefitting from strong growth in both the VIP and mass market.

“[We] expect solid GGR growth in 2016,” they said in the note, adding that 2016 would likely continue to be a “growth year” for NagaWorld.

The Cambodian casino’s VIP rollings increased by 65 per cent year-on-year in the first quarter of 2016.

NagaWorld’s “Macau-based junkets should continue to fuel VIP GGR growth, albeit at a much lower rate” than in 2015, Citi analysts said, projecting 15 per cent VIP GGR growth in 2016, compared with 27 per cent last year.

Lorien Pilling, director of Global Betting and Gaming Consultants (GBGC), said NagaCorp has benefitted from the willingness of junket operators to divert players from major-league casinos in Macau to NagaWorld in Phnom Penh.

However, the group recently reduced its incentives to junket operators in an effort to boost its VIP profit margin.“The gambling margins from VIP junket play tend to be low… but the costs of servicing them can be high,” he explained.

“So the casino has to balance the costs of servicing the high-end players and the revenues they bring.”

According to NagaCorp’s 2015 annual report, about 70 per cent of the company’s $175.8 million cost of sales went to covering the tab of its five largest junket operators, which collectively brought in just under a third of the company’s $503.6 million revenue.

Citi analysts also estimated a slowdown in NagaWorld’s mass market GGR growth.

“We assume growth [will] slow to circa 12 per cent (from 18 per cent last year), reflecting the moderating visitation growth,” they said in the research note.

NagaWorld, the only casino licensed to operate in Phnom Penh, had 287 gaming tables and 1,656 electronic gaming machines (EGMs) in place at the end of 2015. The company posted $172.6 million net profit in 2015.