NagaCorp Ltd, the operator of Phnom Penh’s NagaWorld casino and hotel complex, racked up an impressive winning streak during the first half of this year, which it attributed in part to Cambodia’s vibrant tourism market and political stability.

The Hong Kong-listed company said in its interim report released on Friday that its net profit growth for the first half of 2017 was the result of a surge in VIP rollings and visits to its main gaming floor. Gross gaming revenue soared nearly 40 percent year-on-year to $386.8 million, while net profit increased 20.3 percent to $150.6 million.

“Our positive results were attributed to a combination of solid business strategy and acumen, operational and execution efficiency, and an increasingly vibrant tourism market in a politically stable country,

leading to an increase in business volume across all segments of the gaming business,” NagaCorp Chairman Timothy McNally said in the report.

He added that the future growth would hinge on increased overall visitation.

NagaWorld’s mass market and electronic gaming machine revenue indicators, which increased by 23 percent and 15 percent, respectively, came on the back of a 36 percent increase in Chinese visitors for the first five months of this year. Meanwhile, VIP revenues grew by 89 percent year-on-year, generating $210.5 million.

McNally said the strong performance of the VIP market, which since 2013 has relied on junket operators flying in visitors, has allowed the company “to balance the increase in table limits while managing volatility and credit risk”.

In March, Colliers International (Hong Kong) Ltd valued NagaCorp’s property assets at $5.4 billion, adding that this would allow the firm to further penetrate into new markets that would fuel business growth.

The company’s 1,000-room hotel and casino in the Russian port city of Vladivostok, which has faced delays and will likely far exceed the projected development costs of $350 million, is expected to be completed sometime in late 2019, NagaCorp said in its interim report.

Meanwhile, the casino operator’s second complex in Phnom Penh, Naga2, is set to open in the fourth quarter of this year.

The massive $369 million development will double NagaWorld’s hotel space and gaming capacity and is expected to generate $113 million in incremental EBITDA during its first full year of operation, according to gaming-focused brokerage Union Gaming Securities Asia.

NagaCorp reported just $4 million in tax expenses for the first half of 2017, compared to $3.7 million during the same period a year earlier. The company attributed the increase to a modest bump in its monthly gaming obligation payments paid to Cambodia’s Ministry of Economy and Finance (MEF).

Last year, the MEF ordered NagaCorp to pay an additional $16.6 million in taxes after “discrepancies” were uncovered during an audit of the company’s 2014 and 2015 financial reports.

Auditors determined that NagaCorp had exceeded its seven-year grace period, which ended in 2013, to complete construction on the 700-room NagaWorld complex before it became subject to taxation on non-gaming revenues.

The Post reported in July that MEF officials have said the company would be on the hook again this year for at least an additional $16.6 million in non-gaming revenue taxes, while its Naga2 property would be subject to taxation immediately upon opening.

NagaCorp’s interim results, finalised before the government’s confirmation of the additional tax obligations, did not take these tax payments into account.

Lorien Pilling, director at Global Betting and Gaming Consultants in the UK, said that while Nagaworld had certainly benefitted from a very low tax rate, in some ways it was needed for the company to compete against its regional peers.

“A low tax rate means the company is left with more money to spend on improvements to facilities or on marketing to attract new customers, including VIPs,” he said. “Higher tax payments means there could be less money, or less incentive, to continue that strategy.”

However, Pilling acknowledged that if the government’s stance was firm and taxes on non-gaming revenue would be applied in perpetuity, NagaWorld should make that transparent to its shareholders.

“If the government has confirmed the new tax situation, then it would be prudent for NagaWorld to take the likely future payments into account in its projections,” he said.