Citi: Lowers NAGACORP (03918) target price to HK$4.1, third-quarter gaming revenue below expectations

Citi issued a research report stating that NAGACORP (03918) recently announced key operating metrics for the third quarter of this year, with total gaming revenue falling 43% year-on-year to US$114.2 million, about 15% below the bank's expectations. The bank believes that external factors such as security concerns including the Thailand-Cambodia border conflict and telecom fraud, as well as a reduction in direct flights to Cambodia, continue to weigh on NagaWorld's gaming demand. The bank noted that the continued weakness in the VIP segment was not surprising, but mass-market table turnover fell 18% quarter-on-quarter, prompting the bank to expect a genuine demand recovery to begin only in early fiscal year 2027. The sharp year-on-year decline in gaming turnover may also suppress year-on-year EBITDA margin expansion in the second half (EBITDA margin rose 3.8 percentage points year-on-year in the first half). Taking into account the metrics already announced for the third quarter, Citi lowered NagaCorp's earnings forecasts for fiscal years 2026 to 2028 by 8% to 12%, cut its target price from HK$5 to HK$4.1, and maintained its "Buy" rating. The stock's current price implies about 3.2 times forecast EV/EBITDA for fiscal year 2027, close to two standard deviations below the historical average, indicating valuation is not high.