A research paper by a former analyst in the banking sector, Michael Ting, suggests that Suncity Group Holdings Ltd’s Hoiana casino project, in Vietnam, is unlikely “significantly” to contribute to the Hong Kong-listed entity’s profits “until financial year 2022”.
This was due to the “current macro[economic] uncertainty involving Covid-19, along with only an expected gradual resumption of international travel,” added Mr Ting’s paper.
It was produced on behalf of Singapore-based Smartkarma Innovations Pte Ltd, described as an “independent investment research network”.
Until April this year, Mr Ting was a director at Malaysia-based banking group CIMB.
A preview period for Hoiana – including for casino operations – started on June 28.
In early August, Andrew Lo, an executive director at Suncity Group Holdings, said it could take “five to six years” for his firm to see payback on its share of investment in the Hoiana casino resort scheme on Vietnam’s central coast.
Mr Lo added at the time that the group expected the Covid-19 pandemic to have a negative effect on Vietnam for “at least” the remainder of this year.
Mr Ting reiterated in his paper that Suncity Group Holdings owns in effect 34 percent of the project, “with the remaining partners… who own roughly one-third each”.
Other parties involved in the project include the Vietnamese asset manager VinaCapital Group and a subsidiary of Hong Kong’s Chow Tai Fook Enterprises Ltd.
He added: “Hoiana phase one [has] a capital expenditure budget of US$1 billion [and] over 1,000 hotel rooms, 140 gaming tables (two-thirds VIP, one-third mass-market) and 330 slots.”
Mr Ting said there was a better margin in terms of earnings before interest, taxation, depreciation and amortisation (EBITDA) on gaming at Hoiana relative to Macau, where the privately-held junket brand Suncity Group – also led by Alvin Chau Cheok Wa – has its core operations. The difference in tax outlay could help Hoiana’s prospects, said the Smartkarma paper.
The Suncity brand “already operates a VIP room at the Crowne Plaza in Da Nang,” wrote Mr Ting.
“We estimate that Suncity generated roughly US$1.4 million GGR (gross gaming revenue) per table per month at Crowne Plaza.
“Extrapolating this to the 140 tables at Hoiana phase one, we estimate that the property can generate roughly US$196 million of GGR per month, or US$2.35 billion per year,” he added.
“Applying a 20-percent EBITDA margin – double that of Macau – we estimate that Hoiana phase one at full ramp, can achieve EBITDA of US$470 million per year, which is 70 percent of NagaCorp Ltd’s financial year 2019 EBITDA,” added Mr Ting.
He was referring latterly to a Hong Kong-listed firm that is the monopoly casino operator in Cambodia’s capital, Phnom Penh.
