5 Casino Services Stocks to Play
1. Entertainment Gaming Asia contracts with venue owners or operators of resorts, hotels and casinos for placing Electronic Gaming Machines (EGMs) on a revenue sharing basis and directly acquire and install the EGMs and other gaming peripherals at relevant gaming venues. As of Dec. 31, 2010, the company had 2,039 EGM seats with 492 held in inventory and 1,547 in operation. The stock has gained 40% during the past one year.
The company currently has customers in Macau, Melbourne, Perth and Sydney. Its major competitor for gaming chips and plaques is Gaming Partners International.
During the year ended 2010, total revenue surged 42% to $22.2 million from $15.6 million a year earlier, attributable to higher revenue from the Electronic Gaming Machine (EGM) segment. EGM revenue more than doubled to $14.3 million from $7 million, driven by a 19% increase in seats in operations coupled with a 31% increase in average net win per unit per day. Moreover, revenue from non-gaming products increased 61% to $6.6 million, whereas table game products' revenue declined 71% to $1.3 million.
The company reported a gross margin of 29% for 2010 as opposed to a negative margin of 14%. Subsequently, net loss narrowed to $5.2 million or 5 cents per share, compared to $26 million or 23 cents per share a year ago. Cash and cash equivalents more than doubled to $10.2 million from $4.2 million at the end of Dec. 2009.During May 2010, the company bagged a license to open a casino hotel in the Takeo province of Cambodia. As part of its growth strategy, the company plans to operate regional casinos under the Dreamworld brand focusing on selected Pan-Asian emerging gaming markets. >>To see these stocks in action, visit the 5 Casino Services Stocks to Play portfolio on Stockpickr.
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