Our past Idea of the Month pick NagaCorp has had a great year, though it’s still under the radar — as I said in my annual review, I still love their flexibility in attracting mid-size and regional gamblers so they don’t have to fight for the “whales” that Macau and Singapore casinos hunt, and their consistent profitability and high dividend make it still quite compelling despite the fact that the majority owner can do pretty much whatever he wants with the company (including sell it a neighboring property that they’ll probably use for a major expansion over the next few years).

Here’s a note from the Bangkok Post that I found interesting — lots of Vietnamese and Thais flowing into NagaWorld and the other Cambodian casinos (Naga has a lock on Phnom Penh and surrounds, but there are other casinos outside the city, near the borders for bus junketeers from those countries), and continuing capacity, including from illegal casinos in several regional countries where gambling is officially illegal, seems to not be slaking the demand for gambling at all. NagaCorp (3918 in Hong Kong, NGCRF on the pink sheets) is now a billion-dollar company and it’s not dirt cheap, but it’s not expensive either with a trailing PE around 12 and a dividend yield of better than 5%. There are other interesting gambling companies out there both in the US and in Southeast Asia and Australia, but NagaCorp remains at the top of my list. I do not personally own the shares. They’ll probably release earnings in about two weeks FYI and the stock has been quite volatile and has already doubled this year, so if you don’t happen to own shares there’s certainly a good chance that pullbacks over the next several months could bring a better buy price, particularly if emerging/frontier markets in general take a tumble, but at this valuation I still think it’s a perfectly reasonable buy.

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