AsianLogic Results: First Glimpse of Asia-Facing Operational Realities

11 April 2008

The various markets of Asia have been the focus of growing interest within the I-gaming industry over the last 18 months. Until now, however, it has been difficult to gauge what the potential of these markets is because few Asia-facing operators made their financial performance public. The maiden full-yearly results from AsianLogic, the land-based and Internet gambling operator, give the first glimpse into the realities of operating in the region.

The company posted total revenues from its gaming activities of $54.3 million across 2007, almost doubling its 2006 figure of $27.8 million. Gross profit on this revenue was $5.55 million, versus $3.73 million a year ago. Although a 49 percent increase year-on-year, the figure, $5.5 million, actually represents a fall in gross profit margin from 13.4 percent in 2006 to 10.2 percent in 2007.

While casino gaming activities, both on- and offline, accounted for around 92 percent of revenues, the most interesting figures come from AsianLogic’s poker business. Revenues from rake and tournament fees grew from just $64,000 in 2006 to $1.16 million in 2007. It is not immediately clear from the results whether Asian players accounted for all of this growth in poker revenues, as the company also took more than $4 million from gaming activities in Europe.

But it might be inferred from the fact that AsianLogic decided to buy the Asian Poker Tour (APT) in February that it is seeing a rapidly-growing interest in the game from its Asian customers. In 2008 the APT will host events in the Philippines, Macau, South Korea and Singapore. Christopher Parker, AsianLogic’s chief executive, said that there are plans to expand the tour to six events from 2009.

Meanwhile, acquisition appears to be a central part of AsianLogic’s strategy to build its presence in the region. The company used its full-yearly results to announce that it has agreements to acquire an unnamed "major Asian e-gaming operator" and also to take a stake in another listed Asian gaming company with a view of pursuing further joint-venture activities.

It was seen as quite a bold move when AsianLogic went ahead with its Alternative Investment Market listing amid the market turbulence late last year; but its boldness might now be paying dividends in its acquisition strategy. The cash raised from its flotation is a useful bargaining tool in its negotiations with other companies that are finding it difficult to raise credit through the traditional channels, given the current global economic situation.

The company has previously stated that casino players in Singapore and Malaysia are its principal sources of revenue, but the annual results give disappointingly little breakdown as to which markets are generating the revenues -- it is all classed under the broad category of "Asia."

The lack of a regulatory clarity in many Asian gambling markets is an area of concern for many operators considering entering the region. It is noticeable by its absence, therefore, that AsianLogic’s report lacks a detailed discussion of the regulatory environment that is so often a feature of other I-gaming companies’ announcements.

The results certainly show impressive year-on-year increases in AsianLogic’s revenues from its gaming activities, and the company is making the most of its early entry into the Asian market, compared to its Western competitors.

Its competitors, however, are beginning to become more active in Asia. Gigi Levy, chief executive of 888 Holdings, said at his own company’s annual results this week that its Asian Web site,, was performing well in the early stages since its launch.

Through its various acquisitions AsianLogic has assembled a broad portfolio of brands for its casino and poker products. One major challenge that lies ahead for the company is whether or not it can make a success of these diverse brands in different markets, compared to the likes of 888, which might opt to tackle the Asian markets with a single-brand identity. It will be interesting to see if one strategy wins out over the other.

Analysts with Collins Stewart, the international brokerage, maintain a "buy" rating on AsianLogic shares, which in late-afternoon trading were up 5.13p, or 7.28 percent, to 75.63.

Lorien is a research analyst with Global Betting and Gaming Consultants, and currently resides on the Isle of Man. Prior to this, he spent three years at a leading United Kingdom gambling firm, providing regulatory and market research for its various international e-gaming ventures.