Suncity records revenue drop but is optimistic of swift turnaround

By Noah Taylor Updated
Suncity to develop its own hotel brand

A Hong Kong-listed casino operator has recorded a two-thirds revenue drop for the 2020 financial year, netting just $30.3 million.

Gambling Insider reports that Suncity Group endured forced venue closures, which took a toll on the company, most notably at its new Hoiana resort in central Vietnam.

The flagship property was slated for a grand launch on June 28, but due to the pandemic, it was revised to a partial opening.

The resort recorded total net revenue of $4.8 million and a normalised adjusted earnings before interest, tax, depreciation and amortisation of $30.8 million, in what the company called an “extremely challenging business environment due to COVID-19.”

In October, the group acquired a controlling stake in the Tigre de Cristal resort in Russia and reported strong performances to end the year.

“COVID has offered a chance to prove that an integrated resort with a local exposure could offer some downside protection, such as Tigre de Cristal, with the support of the local Russian market,” group chairman Alvin Chau said in a shareholder letter.

While the financial year results are below initial expectations, the group is forecasting for strong future growth.

Investments continue to be made across the portfolio, including ongoing preparation for the Hoiana full launch, gaming upgrades at Tigre de Cristal and the continued construction of the Suncity Westside City project, in Manila, slated to open in 2023.

Suncity struggles laid bare in latest memo

Junket operator Suncity has seen its rolling chip volume recover to only one fifth of pre-COVID-19 levels.

A memo from Goldman Sachs reported by GGR Asia reported in January that the Suncity brand, namely Suncity Group Holdings, has seen its rolling chip volume recovery to about 20 per cent of pre-virus levels.

Hong Kong-based analysts Simon Cheung, Alpha Wang and Carrie Jang issued the note after the institution held a ‘Gaming and Conglomerates Corporate Day’ last Friday.

“Suncity commented that the pace of VIP recovery has so far been behind expectation.

“In response to the soft market conditions, it has decided to close down VIP rooms in Australia, South Korea and selective ones in Macau.”

The institution suggested that VIP gross gaming revenue in the Macau market only recovered to circa 20 per cent of the pre-COVID-19 level in December, “lagging behind” the overall Macau gross gaming revenue recovery pace for that month, which had moderated its year-on-year contraction to just under 66 per cent market wide.

Goldman Sachs said that the Suncity brand’s “bookings for the Chinese New Year holiday by its VIP customers are also relatively light.”

“Overall, the group is taking the view that the Asia VIP gaming market will take time and only recover gradually.”

High-roller players served in the Macau market by the Suncity brand had found it “quite troublesome to return” to the city, said Goldman Sachs.

The institution mentioned issues such as suspension in mainland China of self-service kiosks that could otherwise be used to make applications for a Macau trip using a mainland exit visa under the Individual Visit Scheme for independent travellers.

Goldman Sachs also flagged as a consumer barrier mentioned by Suncity, the need to undergo a COVID-19 test and show a valid certificate in order to seek quarantine-free entry to Macau from the mainland.

Nonetheless, Goldman Sachs said the Suncity brand had “no intention” of changing its strategy of “expanding into overseas markets in the next two to three years, building its own integrated resorts across Asia outside of Macau.”

The brand had “delayed the grand opening of the Vietnam casino, Hoiana, until the second half of 2021, while last week it announced that work on phase two of Hoiana would start this year.

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