Costs also tumbled to $1.55 million, compared to $1.92 million in the pcq, and mean net profit climbed to $3.81 million versus $1.76 million in the pcq. The big swing into profit is also reflected by lower interest charges as debt falls and as the company cycles off a weak comparable quarter, which was hit by legal disputes and the volatile 'junket' or tour bookings markets. 

Donaco operates casinos in the emerging markets of Cambodia and Vietnam that are volatile by nature and also subject to unpredictable regulatory environments. Similar to Crown Resorts Limited (ASX: CWN) in Australia, a lot of the patrons are relatively wealthy international tourists, which also means VIP turnover can be unpredictable. 

One of Donaco's main institutional investors has been Perpetual Limited (ASX: PPT), although I would not suggest buying shares in a South-East Asian casino operator myself. Donaco shares are down more than 80% since October 2016, with the business claiming it has now resolved its legal woes and is set for a turnaround. 

The post The Donaco share price catches on fire as it swings to profit appeared first on The Motley Fool Australia.

In fact, three shares at the small end of the market have posted particularly strong gains today. Here's why they are surging higher:

The Cynata Therapeutics Ltd (ASX: CYP) share price is up 4% to $1.04 after the biotechnology company announced the completion of the clinical study report for its Phase 1 clinical trial of CYP-001 for the treatment of steroid-resistant acute graft versus host disease (GvHD). A copy of this report has now been provided to Fujifilm, which has 90 days to decide whether it wishes to exercise its license option. The phase 1 clinical trial delivered strong results with 13 out of 15 patients showing an improvement in GvHD severity by a least one grade compared to the baseline.

The Donaco International Ltd (ASX: DNA) share price has stormed 13.5% higher to 5 cents despite there being no meaningful news out of the casino and resort operator. In fact, the only bit of news out of Donaco today was that Perpetual Limited (ASX: PPT) has been selling shares, cutting its stake in the company down from 13.5% to 7.7%. The company's shares have been extremely volatile this week after it announced a strategic review to consider ways to unlock the value of its assets and provide value to shareholders.

The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price has jumped 15% to $1.52 after announcing that it has met the primary endpoint of its phase 2B randomised double-blind placebo-controlled clinical trial. The trial was designed to evaluate the effects of injectable pentosan polysulfate sodium (iPPS) on knee pain in subjects with knee osteoarthritis and subchondral bone marrow edema lesions (BMELs) as assessed by the Knee injury and Osteoarthritis Outcome Score Pain subscale. According to the release, 46.2% of subjects receiving iPPS showed a greater than 50% reduction in pain from baseline compared to 22.5% of subjects receiving a placebo.

The post These small cap ASX shares are surging higher today appeared first on The Motley Fool Australia.

Donaco shares even hit a high of $1.48 back in 2014, but it's been all downhill since then as the group reported a number of operating problems at its two key casinos and resorts – they're the Star Vegas Casino in Cambodia and the Aristo Casino in northern Vietnam on the border with China.

At its November 29 AGM Donaco's management reported that the vendor of the Star Vegas casino was in breach of a 'non compete" clause in the sale contract. It also claimed the vendor was poaching VIP junkets away from the Star and is now in a court battle to force the vendor to obey the sale contract.

Another unusual operating problem is that Donaco reported Chinese criminal gangs have been putting off VIP punters from taking a chance at its Aristo Casino in Vietnam, which relies heavily on VIP players crossing the border from China to gamble.

Finally, the group also has US$39.9 million in debt secured against the assets of the Star business, with it reporting EBITDA of $5.2 million for the first 4 months of 2019.

Its board is currently undertaking a strategic review to consider how best to manage or eliminate the outstanding bank debt.

The post Why the Donaco share price is going nuts today appeared first on The Motley Fool Australia.

Let's take a look at what might be behind the share price action of some of today's biggest losers.

The Galaxy Resources Limited (ASX: GXY) share price is down 4% to $2.36 even though the lithium miner with operational interests in Argentina, Western Australia and Canada released no news to the market. Spot lithium prices are opaque as the commodity is not exchange traded so the lithium miners' share prices can be volatile based on the variable reports of achieved lithium prices. According to Galaxy global demand for lithium will be 5x greater by 2025 thanks mainly to the rise of electric vehicles. It looks well placed to capitalise if lithium prices do soar.

The Automotive Holdings Group Ltd (ASX: AHG) share price is down 3.4% to $1.42 today and has now lost half its value over just the last 6 months. This shocking performance of Australia's largest car dealership network operator is mainly due to a profit downgrade issued on November 23 with the group now expecting operating profit between $56 million to $59 million. Management blamed the downgrade on weak economic conditions, including falling house prices putting off people buying a new car.

The Donaco International Ltd (ASX: DNA) share price is down 11% to 3.9 cents and is now down around 90% over the course of just 2018. It seems investors are losing all confidence in the South East Asian casino operator after it warned criminal gangs were putting off punters from taking their chances at its Vietnamese casino. It's also locked in a legal dispute with a competitor it claims breached non-compete clauses in a contract.

The QBE Insurance Group Ltd (ASX: QBE) share price is down 4.5% to $9.92 despite the group telling investors today to expect higher profits in 2019. It seems shareholders are upset that its CEO has not come up with more than $130 million in net cost savings to be delivered by 2021. The group is also targeting an expense ratio around 14% in 2021, which would be a 1.5% improvement from current levels and includes anticipated premium rises. However, it seems this is not enough for demanding investors.

The post Why Galaxy Resources is among 4 shares tumbling today appeared first on The Motley Fool Australia.

So let's take a look at three businesses that recently hit 52-week lows and consider what might be behind the share price falls.

FAR Ltd (ASX: FAR) is an oil and gas explorer focused on opportunities in West Africa and Senegal in particular. It has been heavily hyped in the past and boasted of two "world class" oil discoveries in offshore Senegal. It also claims to own offshore blocks in Gambia that contain more than 1 billion barrels of oil according to previous estimates. The excitement around its claims has seen the share price reach as high as 14 cents and a more than $700 million valuation. However, as oil prices and the excitement has faded the stock recently hit a 52-week low of 6.5 cents.

Ainsworth Game Technology Limited (ASX: AGI) shares hit a 52-week low of 74 cents today after the pokie or gaming machine business recently blamed "intense competition" for dragging down its FY 2018 result. In particular it also warned that revenues and profit before tax are expected to be "materially lower" in the first half of FY 2019 compared to the prior corresponding half. The stock is now down around 70% over just 2018.

Donaco International Ltd (ASX: DNA) shares are down 16.4% to a 52-week low of 9.1 cents per share after the Cambodia and Singapore casino and hotel operator warned that trading had been hit in recent months by a number of factors. These include a "Chinese crime syndicate" scaring off punters from its North Vietnam casino and "illegally operating" competing casinos popping up in Cambodia.

These are the kind of risks when it comes to investing in South East Asian casinos as the shares are down around 66% over just the past year.

The post Why FAR Ltd is among 3 ASX shares at 52-week lows appeared first on The Motley Fool Australia.

Stripping out the impairment – related to the Star Vegas casino license –  the group generated an underlying NPAT of $18.3 million and EBITDA of $42.4 million – as consistent with its April's guidance.

According to Donaco CEO Joey Lim the group is pursuing legal avenues over the Star Vegas casino impairment due to breaches of non-compete clauses.

But Lim says the "balance sheet remains strong" with debt to equity reducing to 6%, but its result revealed a net revenue drop out of Star Vegas and Aristo International.

Entertainment stock big wig Aristocrat Leisure Limited (ASX: ALL) shares are up of late, although the company is not due to report this season, with its preliminary report not due out until November.

Crown Resorts Ltd's (ASX: CWN) share price will be one to watch as the group takes on a NSW Government agency over its new casino at Barangaroo.

The post Why Donaco International Ltd (ASX:DNA) shares are sliding today appeared first on The Motley Fool Australia.

Here is a preview of week five:

Monday.

This morning results are expected to be released from telco company Amaysim Australia Ltd (ASX: AYS), struggling child care operator G8 Education Ltd (ASX: GEM), fertility treatment company Monash IVF Group Ltd (ASX: MVF), and broadband equipment manufacturer Netcomm Wireless Ltd (ASX: NTC).

I'll be looking out for improvements in Amaysim's ARPU, G8 Education's occupancy levels, and trading conditions for Monash IVF. The market will no doubt be expecting a strong result from Netcomm Wireless after it delivered an impressive half year result which saw revenue rise 89% to $88.6 million.

Tuesday.

Three big results are due to be released on Tuesday from fast-growing tech star Appen Ltd (ASX: APX), health supplements company Blackmores Limited (ASX: BKL), and fuel retailer Caltex Australia Limited (ASX: CTX). According to the Bloomberg consensus estimate, the market is looking for NPAT of 70.7 million from Blackmores in FY 2018.

Elsewhere, I feel there's a reasonably strong chance that Appen will upgrade its full year guidance when it releases its half year results. I expect this to be driven by strong demand from the machine learning market and favourable currency movements.

Wednesday.

Wednesday is expected to be a busy day with releases pencilled in for game technology company Ainsworth Game Technology Limited (ASX: AGI), infant formula star Bellamy's Australia Ltd (ASX: BAL), building materials company Boral Limited (ASX: BLD), personal care products company BWX Ltd (ASX: BWX), telecom and cloud services company Macquarie Telecom Group Ltd (ASX: MAQ), regenerative medicine company Sirtex Medical Limited (ASX: SRX) and airline Virgin Australia Holdings Ltd (ASX: VAH).

According to the Bloomberg consensus estimate, the market expects NPAT of $45.7 million from Bellamy's. However, all eyes will be on its guidance and an update on its CFDA application.

Thursday.

It looks set to be a quieter day on Thursday with just three releases scheduled. These include struggling private hospital operator Ramsay Health Care Limited (ASX: RHC), casino operator Donaco International Ltd (ASX: DNA), and financial services company Perpetual Limited (ASX: PPT).

In respect to the Ramsay result, investors will be focused on its guidance for the year ahead and whether trading conditions have improved.

Friday.

The week finishes with results releases from plumbing parts company Reece Ltd (ASX: REH) and data centre operator NEXTDC Ltd (ASX: NXT). The latter is not expected to deliver a strong profit result due to its increased investment in its data centres to fuel future growth. But investors will be expecting the company to report a strong increase in demand for its data centre services to back up its substantial increase in capacity.

The post Earnings season week five preview appeared first on The Motley Fool Australia.

Four shares that have defied the market and pushed higher are listed below. Here's why they are ending the week with a bang:

The Donaco International Ltd (ASX: DNA) share price has jumped almost 18% to 20 cents. This morning the casino and resort operator provided an update on the freezing order over its shares held by the Thai vendors of the Star Vegas casino business. Donaco advised that the Supreme Court of New South Wales has granted a further extension to the freezing order until 2 November 2018, when the matter is listed for further directions. The defendants own approximately 148 million shares in Donaco, representing approximately 17.9% of Donaco's issued capital.

The Domino's Pizza Enterprises Ltd (ASX: DMP) share price has surged 5.5% higher to $51.89 after the release of a positive broker note out of Macquarie. According to the note, the broker has upgraded the pizza chain operator's shares to an outperform rating from neutral with a $55.00 price target. Its analysts appear more optimistic on the company's chances of achieving its full-year guidance.

The iSelect Ltd (ASX: ISU) share price has rocketed 31% higher to 82 cents after the price comparison company admitted that it has received several takeover or merger approaches. One party that is rumoured to be interested is IHA Group which has built up a 12.2% interest in the company over the last six weeks. IHA Group is associated with rival comparison company Compare the Market. The board are looking through the approaches and will update the market accordingly.

The Livetiles Ltd (ASX: LVT) share price has stormed 7.5% to 43.5 cents after the technology company provided an update on its LiveTiles Bots products. According to the results, LiveTiles Bots customer acquisition is surpassing early expectations with multiple customers secured via its joint campaign with Microsoft. The product has generated annualised recurring revenue of $0.8 million since 1 April 2018. A promising start but it is still early days.

The post Why these 4 ASX shares are ending the week with a bang appeared first on The Motley Fool Australia.

Insider buying is often regarded as a bullish indicator as nobody should theoretically know a company and its prospects better than its own directors.

For the same reasons insider selling is more often than not seen as a bearish indicator.

Three shares which have been experiencing meaningful insider buying recently are listed below:

Aristocrat Leisure Limited (ASX: ALL)

A change of change of director's interest notice released on Tuesday reveals that non-executive director Sylvia Couder has picked up her first shares in the company this week. Mrs Couder bought 6,050 shares on-market for an estimated price of US$109,339.15 according to the release. This certainly could be good timing by Mrs Couder, this morning Goldman Sachs added Aristocrat Leisure to its conviction buy list with a price target of $30.70 on its shares.

Donaco International Ltd (ASX: DNA)

This week the casino and resort operator's managing director and chief executive officer, Joey Lim Keong Yew, has taken advantage of Donaco's share price decline and topped up his considerable holding. According to the change of director's interest notice, Mr Lim has picked up 40,000 shares through an on-market trade at 24 cents apiece. This leaves him with a direct holding of 37,613,572 ordinary shares and an indirect holding of 164,253,225 ordinary shares. Donaco's shares are down 42% over the last 12 months.

Nanosonics Ltd. (ASX: NAN)

According to a change of director's interest notice released this morning, non-executive director Steven Sargent has bought 20,000 shares through an on-market trade for approximately $48,600. This has increased Mr Sargent's indirect holding to 107,000 ordinary shares. This purchase may go some way to settling the nerves of shareholders. In recent weeks Nanosonics has experienced a surge in short interest, so having a director show his confidence in the company by buying shares on-market is a big positive. According to the most recent data from ASIC, the infection control company is the eighth most shorted share on the ASX with 11.7% of its shares held short.

The post Insiders have been buying these 3 ASX shares this week appeared first on The Motley Fool Australia.

Unfortunately not all shares have been able to follow the market higher today. Here's why these four shares have tumbled lower:

The Donaco International Ltd (ASX: DNA) share price is down almost 9% to 26.5 cents. This morning the casino and hotel operator advised that it expects to deliver group half-year revenue in the range of $43 million to $44 million, with EBITDA in the range of $19 million to $20 million. This is in-line with previous guidance. Today's decline may relate to an impairment charge of $144 million it expects to make on its Star Vegas Casino Licence.

The GUD Holdings Limited (ASX: GUD) share price is off 2.5% to $11.70. Almost all of the conglomerate's decline today can be attributed to its shares going ex-dividend this morning. Eligible shareholders can now look forward to receiving its 24 cents per share fully franked interim dividend in their accounts on March 2.

The MNF Group Ltd (ASX: MNF) share price has tumbled over 7% to $5.55 despite posting a 25% increase in half-year profit this morning. The market appears to have been left disappointed with the voice telecommunications provider's decision to relaunch its Pennytel brand. This is expected to negatively impact its profit result, leading to management downgrading its full-year NPAT forecast from $15 million to $12.5 million. The Pennytel launch is, however, expected to be earnings accretive next year. So investors may want to consider sticking with this one or buying the dip.

The SG Fleet Group Ltd (ASX: SGF) share price has fallen almost 8% to $3.92. This morning the fleet management company posted an 18.8% increase in net profit after tax to $31.6 million on revenue of $154.2 million. This appears to have fallen short of the market's expectations.

The post Why these 4 ASX shares have tumbled lower today appeared first on The Motley Fool Australia.

In late trade the casino operator's shares are up over 4% to 50.5 cents.

What happened?

This morning Donaco announced that it has signed binding agreements with Mega International Commercial Bank to refinance its current term loan facility.

The company has repaid a total of US$63.4 million in the past two years, with the remaining principal amount of the current facility standing at US$56.6 million.

The refinance agreement with Mega Bank today will be for a new facility of US$57 million, with the term extended for three years from the date of drawdown.

The market appears to have responded positively to the news due to the interest rate being reduced slightly to the LIBOR six-month rate plus 6%.

Furthermore, a number of covenants controlling capital management (dividends and buybacks) have been relaxed.

The post Why the Donaco International Ltd share price is up 4% today appeared first on The Motley Fool Australia.

In afternoon trading, Crown's share price has plunged 10% to $11.70, but other casino operators are also getting hammered. Star Entertainment Group Ltd (ASX: SGR) ex-Echo Entertainment has also seen its share price drop 5.5% to $5.41, SkyCity Entertainment Group Limited-Ord (ASX: SKC) share price is down 3.9% to $4.20 and Donaco International Ltd (ASX: DNA) is down 3.5% to 41.5 cents.

The reason is that a crackdown on Chinese VIP gamblers by the Chinese government doesn't just affect Crown. It is likely to affect all the casino operators that are trying to lure Chinese VIPs to their overseas casinos, whether they are in Macau, Australia, New Zealand, Laos, Thailand or Vietnam.

According to reports, the staff detained are almost all of Crown's China-based employees, and it appears that the arrests were timed to coincide when Jason O'Connor, Crown's head of VIP International had arrived in the country.

China is struggling to control the massive flow of capital out if the country, particularly through the gambling mecca of Macau. A crackdown on gamblers flocking to the city's numerous casinos saw revenues plunge, but also appears to have forced offshore casinos to ramp up their direct marketing to Chinese high rollers – who spend millions in the casinos – and are worth much more than locals in many casinos.

However, casino companies are not allowed to advertise their casinos in China. They can advertise other facilities like the resorts, hotels, activities, shopping and restaurants often attached to the casinos.

South Korean sales and marketing staff for casinos in China were arrested last year for "soliciting and organising Chinese citizens to gamble overseas".

The problem for Crown and the other casino operators is that the high rollers could start avoiding those companies with casinos offshore.

It's no secret that many Chinese have been trying to get money out of the country via various means, including purchasing property in Australia and gambling. China is cracking down on these avenues, one reason why a number of Chinese investors are struggling to come up with the cash required to settle on properties where the deposit was paid ages ago.

The post Gambling stocks punished on ASX appeared first on The Motley Fool Australia.

Here are 6 cheap small-cap companies, with very low P/E ratios, that appear to have been completely missed by the market – or perhaps there's a very good reason that the shares appear cheap.

TFS Corporation Limited (ASX: TFC)

The Indian sandalwood plantation manager and sandalwood producer has a P/E ratio of just 5.7% at the current price of $1.44. In the 2016 financial year, TFS Corp produced a net profit of over $90 million, compared to its current market cap of $559 million, but as I noted two weeks ago, the company's actual cash profit was just $14.1 million, with most of the profit coming from accounting gains. That places TFC Corp on a P/E ratio of 39x – not exactly cheap by any standards.

Cedar Woods Properties Limited (ASX: CWP)

The property developer's shares are currently trading on a P/E of 8.8x, after producing a profit of $43.6 million in the 2016 financial year. Additionally, shareholders are getting a fully franked dividend of 5.8% and the bonus is that the company expects to report a similar profit in 2017 as it did in 2016. I've written about Cedar Woods numerous times before and how it appears attractive, and the market has yet to catch on.

United Overseas Australia Limited (ASX: UOS)

United Overseas is a neglected stock on the ASX – most likely because the majority of its assets are holdings in property companies located in Malaysia. The shares almost always trade at a discount to its net tangible assets (84 cents at the end of June 2016 compared to a share price of 61 cents) and UOS reported a half-year net profit of $55 million. Yet its market cap is just $334 million. Add in a decent 4.9% dividend (unfranked) and UOS looks very attractive.

Peet Limited (ASX: PPC)

Another property developer, Peet's shares are trading on a P/E ratio of 11.5x – not as cheap as the 3 companies above, but still cheap compared to the market. With a market cap of $487 million and a net profit of $42.6 million, Peet's shares look cheap, particularly with the company forecasting earnings growth in FY2017 supported by the economic environment. A fully franked 4.5% dividend is also on offer.

Elders Ltd (ASX: ELD)

The rural services company is trying to attract investors back to it after a number of years in the wilderness. Elders had turned itself into a jack-of-all-trades and its business into a mess and has taken the better part of 3 years to sort itself out. But a revived business, clearer strategy and cleaner focus still see the company's shares trade on a P/E ratio of just 8x, despite a net profit of $19.4 million for the six months to end of March 2016 – up 20% over the previous year. A stronger second half is also forecast.

Donaco International Ltd (ASX: DNA)

The operator of two small casinos in Asia, Star Vegas in Cambodia and the Aristo International Hotel in Vietnam, Donaco has a market cap of $395 million and recently announced its first-ever dividend for shareholders. That came on the back of an underlying net profit of $54.4 million, placing the company on a P/E of 7.3x. The company says it expects to continue growing earnings in the year ahead with a number of new initiatives in place. Perhaps the market thinks the shares are too risky – hence the low P/E ratio.

The post 6 dirt cheap small caps appeared first on The Motley Fool Australia.

• Revenue from operations for the year was up a huge 650% to $143 million
• Net Profit excluding non-recurring items was $54 million, up from a loss in FY15
• A maiden, unfranked dividend of 1cps was declared. At the current share price this yields 2.2%
• The company recorded a VIP win rate of 2.97%, significantly higher than for other ASX-listed casinos

So what?

The results were an impressive jump, thanks largely to the acquisition of the Star Vegas casino, the second addition to the company's portfolio located in Cambodia.

Donaco's results are full of fascinating facets, but three in particular stand out for me:

1. When the house wins, it wins big

In gambling the 'house' always wins, but Donaco's houses are structured to win big.

Donaco has a far higher theoretical win rate than domestic Aussie casinos. Crown Resorts Ltd (ASX: CWN), Star Entertainment Group Ltd (ASX: SGR) and SKYCITY Entertainment Group Limited-Ord (ASX: SKC) all use a theoretical win rate of 1.35% on VIP or 'International business' gaming revenues, while Donaco uses 2.85%.

This is likely driven by the different gaming product mix of Donaco's casinos with a bias towards baccarat which reportedly has a higher theoretical win rate for casinos and accounts for around 88% of casino winnings in nearby Macau.

2. Donaco's acquisition of Star Vegas was a true bargain

After acquiring the Star Vegas business at a fair value of US$328 million, an independent revaluation of the business added an instant US$40 million ($55 million) on paper.

This increase was classified as bargain purchase, which according to accounting rules can be recognised on the income statement for the period.

3. Casino licences worth more than the company's market value

Donaco has recorded the fair value of the Star Vegas casino license it acquired at $400 million on its balance sheet at 30 June 2016, greater than the company's entire market capitalisation of $380 million on Tuesday.

While I couldn't find any notes to suggest how the value was initially calculated, based on an example from the book "Fair Value for Financial Reporting" By Alfred M. King, it's possible that the value is derived in some way from the discounted value of future average customer spend, since if there are no customers, the licence itself isn't of any real value.

Outlook for FY17

Donaco plans to keep its foot on the gas heading into FY17, growing VIP gamblers and expanding junket operations into Thailand. If the company can achieve this while continuing to generate strong cash flows, investors may see the addition of an interim dividend in addition to yesterday's 1 cps final dividend.

The post 3 bizarre things about Donaco International Ltd's monster profit growth appeared first on The Motley Fool Australia.

Donaco International Ltd (ASX: DNA) shares are down 1.5 cents to 39.5 cents today despite the business releasing no news to the market. I have written previously of my belief that this hotel and casino operator in Vietnam and Cambodia is a stock to avoid primarily for two reasons. First, net debt continues to balloon higher, and second, its geographic areas of operation carry considerable sovereign and macro-economic risk. Given the outstanding net debt of $89.3 million as at 31 December 2015 I expect the stock to remain under pressure. It is down 46% over the course of the past year.

Fortescue Metals Group Limited (ASX: FMG) is another business with significant debt problems and its shares are down 3.4% to $3.24 today. However, they remain near a 52-week high thanks largely to a rebound in iron ore prices over the second quarter of 2016. Given that iron ore has been steadily trading above US$50 per wet metric tonne recently, Fortescue is sure to be making some healthy profits. However, it remains a high-risk bet only for investors looking to get some synthetic leverage to iron ore prices.

Mesoblast limited (ASX: MSB) is the regenerative medicine business that last week lost a key commercial funding partner for one of its core clinical trials. As a result the stock has lost around 40% of its value and is down 4.5% to $1.13 today. The company is burning through cash at a prodigious rate – around US$22 million per quarter – and with little in the way of revenues to show for its cash burn it remains an extremely risky bet. It has plenty of scientific potential, although that may mean little given its lack of revenues make debt inappropriate, while the US$100 million of cash left on its balance sheet as at the end of March 2016 is already being whittled away.

Admedus Ltd (ASX: AHZ) is down 6.4% to 29.5 cents today and it is another business I have previously suggested investors avoid due to its high cash burn and slower-than-projected growth. It has been trying to sell its regenerative heart patch, while funding other substantial clinical trials. Unsurprisingly, the chief executive recently departed and the company continues to post big quarterly losses due to a failure to get expenses under control versus revenues booked. The stock is down 56% over the course of the past year and the financials mean the stock remains a sell in my opinion.

The post Why these 4 ASX shares are sinking today appeared first on The Motley Fool Australia.

No two companies are the same, but let's consider four of the biggest ASX listed gaming companies: Crown Resorts Ltd (ASX: CWN), Star Entertainment Group Ltd (ASX: SGR), SKYCITY Entertainment Group Limited-Ord (ASX: SKC) and Donaco International Ltd (ASX: DNA).

Comparing for value

To cut through the tangle of different capital structures and depreciation expenses we'll avoid using price-to-earnings ratios. Instead we'll use Enterprise Value (Market capitalisation plus net debt) relative to Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).

The EV/EBITDA measure focuses on the adjusted value of the company compared to what it earns from its operations and by this measure SKYCITY Entertainment looks the best value, followed by Crown Resorts.

Source: Company reports. Calculations by author.

Growth ahead?

SkyCity has had a relatively low growth rate in the last five years, but the key question is if the EV/EBITDA ratio fairly reflects the company's prospects going forward.

Both Crown Resorts and Star Entertainment have huge growth projects ahead which explain their higher valuations. Crown is building a "six-star" hotel resort in Sydney and developing a site in Las Vegas, while Star is part of a joint venture building a new resort on Brisbane's Queens Wharf and expanding its Jupiters Hotel and Casino on the Gold Coast.

SkyCity has its own aggressive growth plans relative to its size, expanding its Adelaide Casino and building the New Zealand International Convention Centre (NZICC) in Auckland in exchange for an extension to its gaming licence and increased gambling facilities which can be expected to drive higher returns.

The markets SkyCity operates in are smaller, but it holds monopoly positions in central locations which draw customers.

The best value option

In my view SkyCity looks to offer the most compelling value today, particularly for conservative investors. It likely has a lower growth profile than Crown Resorts and Star Entertainment, but this is made up for by the great valuation, lower risk projects and monopoly market position. This will support the company's history of steadily increasing earnings and solid dividend.

The post My favourite gaming company for value investors to buy today appeared first on The Motley Fool Australia.

The acquisition implies a total purchase consideration of around $200 million and takes Packer's shareholding in the international casino group to about 53%.

So What: There is an old saying amongst market participants with regards to company insiders which states:

"There are many reasons company insiders sell a stock, but only one reason they buy"

Given the intimate knowledge and insights Packer has of Crown's operations no doubt some investors will be sitting up and taking notice of his decision to acquire more stock especially considering the 17% decline in share price over the past 12 months.

The circa $200 million "top-up" must, however, be kept in context. With an estimated net worth (according to Forbes) of $3.8 billion this purchase represents less than 6% of Packer's purported net worth and could equally be a strategic move to take his shareholding comfortably above the 50% control level as it is a bet on value.

Now What: For exposure to the Chinese market of Macau, Crown is the obvious investment for Australian investors to make.

However for exposure to the Asian gambler market, there are alternatives.

Firstly, VIP clients regularly travel to flagship casinos to play. In this respect, Echo Entertainment Group Ltd (ASX: EGP) receives its share of the lucrative Chinese gambling dollar thanks to its venues in Sydney, Brisbane and Gold Coast.

Likewise, lesser known casino owner Donaco International Ltd (ASX: DNA) operates casinos in Vietnam and Cambodia which cater to customers from China and Thailand respectively.

The post Packer backs Crown Resorts Ltd with $200 million bet appeared first on The Motley Fool Australia.

Ainsworth Game Technology Limited (ASX: AGI) has climbed 13 cents or more than 5% to $2.60 today despite releasing no specific news to the market. The pokie machine manufacturer recently posted a net profit down 3% on the prior corresponding period, as its domestic revenues took a tumble.

The business hopes international expansion can be a growth driver and its intellectual property, product and manufacturing expertise provide an advantage in making machines likely to impress gaming venues. The company forecast a better second half and is probably seeing buying from bargain-hunting investors.

Donaco International Ltd (ASX: DNA) has climbed 2 cents or 3% to 68 cents today as it rebounds from recent 52-week lows as investor confidence in its business model begins to moderate.

The business runs a casino and leisure resort in Vietnam and recently announced a capital raising to fund the US$360 million acquisition of The Star Vegas resort in Cambodia. That seems a fair old sum for a Cambodian casino and given the business model this looks a stock investors might want to avoid.

Ten Network Holdings Limited (ASX: TEN) is another business that has been struggling recently as it faces competition for viewers from multiple new digital platforms. Viewers of the shows may rightly conclude the channel's being run on a tight budget as cost controls are implemented in the wake of falling advertising revenues.

The channel posted a net loss of $168 million in financial year 2014, but did jump 4.3% in trade today to sell for 24 cents. The best hope for investors may be a takeover bid, but given the debt pile and tough outlook any buyer would demand a keen price.

Of these three investors may be best off looking at Ainsworth, but it still looks a gamble compared to The Motley Fool's favourite growth stock for 2015…

The post Here's why these 3 stocks are soaring higher today appeared first on The Motley Fool Australia.

For many investors, when it comes to casino companies, the choice is between the James Packer backed Crown Resorts Ltd (ASX: CWN) and the owner of The Star in Sydney, Echo Entertainment Group Ltd (ASX: EGP).

These two industry giants however aren't the only two options when it comes to investing in casinos…

SKYCITY Entertainment Group Limited-Ord (ASX: SKC), which has just released its half yearly results, owns and operates casinos in Adelaide and Darwin (Australia), and Auckland, Hamilton and Queenstown (New Zealand).

Meanwhile, Donaco International Ltd (ASX: DNA) provides investors with exposure to its casino operations in Vietnam and if all goes to plan in Cambodia shortly as well.

While Donaco's business development is still early stage, making the stock higher risk, it also offers higher growth potential. In comparison, SkyCity has niche monopoly assets which are likely to grow more slowly, but with the benefit of a more defensive stream of earnings.

Here are some of the highlights from SkyCity's just released half-year report –

• Normalised revenues grew 9.1% to NZ$463.8 million
• Normalised profit after tax was flat, gaining just 0.3% to NZ$66.5 million
• Normalised earnings per share declined 0.9% to NZ 11.4 cents per share (cps)
• An interim dividend of NZ 10 cps (partially franked) has been declared
• Redevelopment work on the Adelaide Casino was completed just after the end of the half year which positions the venue to boost revenues and profits in coming periods

Investors with a higher appetite for risk and a focus on high-growth opportunities may be inclined to take a closer look at Donaco to see if it suits their investment criteria. Meanwhile, investors looking for a steady, well established casino operator may be more inclined to research SkyCity further.

The post SKYCITY Entertainment Group Limited-Ord reports: Should you buy? appeared first on The Motley Fool Australia.

The luxury casino, located on the border between Thailand and Cambodia, serves primarily Thai nationals as Cambodians are not permitted to enter casinos and gambling is illegal in Thailand. The casino, which is located in a special zone that does not require a Cambodian visa to enter, has been purchased for $360 million. The funds sourced from Donaco shares offered to the vendor, cash, a new bank facility, and the issue of new shares to current investors.

Donaco shares surged 28% on Tuesday morning following the successful placement of 154 million shares at 60 cents for A$92.4 million of the A$132 million required. The remaining funds will be raised via a retail entitlement offer that will open on February 9.

Shares on issue will rise from 460 million prior to the acquisition to over 820 million, assuming that the retail entitlement is fully subscribed.

Massive Growth

The purchase could be a huge step forward for the small casino operator as the Star Vegas casino is significantly larger than the group's current casino in Vietnam. Group revenue is expected to rise by 488% to $228.3 million, EBITDA is forecast to improve by 345% to $99.9 million, and net profit by 392% to $80.7 million.

This could see earnings per share increase from 1.7 cents to 9.8 cents, based on 820 million shares outstanding, or a stunningly cheap price-to-earnings ratio of just 7.1. Earnings growth prospects are unknown, as is the opportunity for dividends in the future, but Donaco could be set for a strong 12 months.

Competition

The major risk for Donaco is the company's lack of experience in the country and competition from the other eight casinos in the city and 50 casinos in the country. The existing owner will stay on for two years to manage the property and maintain relationships with the respective governments, however Donaco will be on its own after that time.

The post Here's why Donaco International Ltd soared higher appeared first on The Motley Fool Australia.