GGRAsia – China Star pins likely interim loss on Macau downturn

China Star pins likely interim loss on Macau downturn

Aug 18, 2016 Newsdesk Latest News, Macau, Top of the deck

Macau gaming services and hotel company China Star Entertainment Ltd has warned investors it expects to swing to an unaudited loss of between HKD30 million (US$3.87 million) and HKD50 million for the six months to June 30, due in part to “recession” in the Macau casino sector.

In the equivalent period last year, the firm recorded a profit of approximately HKD168.53 million.

The company owns and operates a casino hotel called Lan Kwai Fong (pictured) on the Macau peninsula. China Star runs gaming there under the licence of Macau casino operator SJM Holdings Ltd. Casino Lan Kwai Fong had a total of 84 gaming tables and 70 slot machines as of the end of last year.

The company said in its latest filing that the expected interim loss to June 30 was linked to a likely 29 percent to 33 percent decrease in the HKD263.79-million gross profit realised in the corresponding period last year. This was due to a “significant decrease in revenue from service income from gaming operations as a result of the recession in gaming industry in Macau,” China Star said in a filing to the Hong Kong Stock Exchange after trading hours on Wednesday.

Other factors in the projected interim loss were a recognition of an unrealised loss of approximately HKD13 million arising from a change in fair value of financial assets classified as held for trading investments – as compared to an unrealised gain of HKD178.17 million for such assets in the prior-year period. The change represented “the decrease in market values of the group’s equity securities listed in Hong Kong” as of June 30.

The firm added that the projected interim loss was also related with recognition of loss on fair value of investment properties amounting to approximately HKD25 million during the period.

The interim loss was partially offset by an approximately 46 percent to 50 percent increase – in the six months to June 30 – in the HKD35.83-million in interest income China Star had realised in the prior-year period.

In 2015, the group saw its net profit decrease by 49 percent year-on-year to HKD107.9 million.