Summit Ascent Holdings Ltd – a company controlled by gaming entrepreneur Lawrence Ho Yau Lung – reported on Thursday total net revenue of HKD204.6 million (US$26.1 million) for the first six months of 2017, up 20 percent from HKD170.2 million in the prior-year period, the company said in a filing to the Hong Kong Stock Exchange.
Summit Ascent, which is the lead developer of the Tigre de Cristal casino resort (pictured) in the Russian Far East, posted a loss of HKD5.4 million for the first half of the year, compared to a profit of approximately HKD5.5 million a year earlier.
“[The] net loss arose primarily due to… notional non-cash items which are of a non-operating nature,” the firm stated. Those included depreciation and amortisation costs of HKD63.5 million, interest costs of HKD19.8 million and the absence of a gain of HKD20.2 million related with the disposal of a stake in a non-gaming related business, which took place in the first half of 2016.
The main contribution to the first-half results of Tigre de Cristal came from the casino’s rolling chip operation, which targets VIP customers from Northeast Asia, the firm said in Thursday’s filing.
Summit Ascent said the casino’s rolling chip turnover rose from approximately HKD3.5 billion in the first six months of 2016 to about HKD8.4 billion in the first half of 2017. “Our net revenues from rolling chip business in the first half of 2017 were HKD79.7 million, an increase of 48 percent, compared to HKD53.9 million in in the first half of 2016, primarily driven by an increase in volume of our VIP business.”
The firm recorded mass table net win of RUB442 million (US$7.6 million) in the first half of 2017, down 20.4 percent in year-on-year terms.
“Mass table business in the first half of 2017 saw a small decline in volume compared to the corresponding period in 2016,” the firm stated. “It is mainly because foreign banknotes are not allowed to be used for settling gaming wins or losses under the current Russian legislation… This has discouraged a lot of our Asian customers from making sizeable bets on mass tables.”
Summit Ascent said it was lobbying the Russian government to allow foreign currency banknotes to be used by foreign patrons for gaming-related purposes.
The firm stated that a “much anticipated simplified visa regime for foreign visitors to Vladivostok” introduced last month should help boost business. “We expect that this new visa regime, combined with increasing flight connectivity and ongoing efforts of the Russian government to promote the Russian Far East as a tourism destination, will accelerate the already explosive growth of foreign tourism,” the company said.
It added: “We continue to be optimistic that we will continue our upward trend in terms of overall gaming revenues in our majority-owned Tigre de Cristal property.”
Since August 1, tourists from 18 countries – including from China and Japan – arriving via the Vladivostok airport or seaport can obtain a visa-on-arrival after filing an application online at least four days prior to their visit, according to the official website of Primorsky Krai Development Corp. The latter is a government-owned company overseeing the development of the Primorye casino development area, where Tigre de Crystal is located.
The single-entry visa is free and valid for 30 days from the time it is issued, Primorsky Krai Development said. It allows travellers to stay in Russia for up to eight days.
Summit Ascent said it is currently refining the design and construction requirements for the expansion of its Tigre de Cristal property. It said it expects to open the first stage of Phase II for operations “in the second half of 2019”.
Melco International results
Melco International Development Ltd, a company also controlled by Mr Ho, also announced on Thursday its first half results. The company reported a net profit of nearly HKD164.6 million for the period, it said in a filing to the Hong Kong Stock Exchange.
Melco International became the single largest shareholder in Melco Resorts and Entertainment Ltd in May last year, as its Australian partner in the Asian casino operator – Crown Resorts Ltd – decided to reduce its stake. In February 2017, Melco International completed the purchase of an additional interest in the casino operator from Crown Resorts, increasing Melco International’s ownership to 51.3 percent. The announcement that Melco International would take majority control of the business had been made in December.
Second-quarter unaudited net profit at Melco Resorts rose 18.5 percent year-on-year, to US$36.5 million, the Nasdaq-listed company announced in July.
For the first six months of 2017, Melco International reported net revenue of HKD20.1 billion, up more than 260 percent in year-on-year terms.
Melco International recorded adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD4.7 billion for the first half of 2017, up more than 290 percent compared to HKD1.2 billion in the prior-year period.
Melco International said in July it would not be pursuing a licence for a casino near Barcelona, Spain. Shortly before that, the firm had confirmed that a consortium of which it is part had formally been awarded a licence to develop a casino resort in the Republic of Cyprus.
In June, Melco International completed a merger exercise involving subsidiary Entertainment Gaming Asia Inc. Entertainment Gaming Asia’s business activities include leasing electronic gaming machines in the Philippines market, but the firm has said it has been restructuring its business to focus on social gaming.
Melco International’s board recommended the payment of an interim dividend of HKD0.022 per share. It is expected the proposed dividend will be paid on September 29, the firm said.
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"With the mainlanders and Hong Kongers now effectively barred from entering Macau, the only rationale possible for keeping the casinos in Macau open right now is a social one which is to keep Macau residents employed"
Managing partner of IGamiX Management and Consulting Ltd