The value of an Asian casino development strategy that focuses on Indian consumers rather than targeting Chinese VIP players had been highlighted by recent events, said the chairman of Silver Heritage Group Ltd in the firm’s annual report.
Silver Heritage is currently constructing Tiger Palace Resort Bhairahawa, a casino resort in Nepal on that country’s border with the Indian state of Uttar Pradesh.
“The detention of Crown Resorts employees in China in October 2016 has exposed the significant risks associated with China-facing VIP programmes, calculated to encourage high-value mainland [Chinese] players to visit casinos,” said Silver Heritage’s chairman and non-executive director David Green (pictured in a file photo) – referring to official action in China against Australian casino operator Crown Resorts Ltd, a specialist in serving Asian high roller gamblers.
The comments from Mr Green – a former advisor to the Macau government regarding gaming regulation – were in Silver Heritage’s 2016 report to the Australian Securities Exchange, filed on Monday.
Mr Green added in his commentary: “The reliance of that [China VIP] market on credit has also exposed the fragility of the so-called junket operators who typically source high-value players for casinos outside China.”
Silver Heritage, he added, “has no exposure to gaming credit risk, or to the reputational and business risk presented by undercapitalized junket operators.”
Last week it was reported in Hong Kong – with Chinese state media cited as the source of the information – that China is to increase its efforts to suppress any attempts to entice Chinese people to visit overseas casinos to gamble.
Brokerage Aegis Capital Corp said in an early March note that a political row between China and South Korea regarding the placement of a U.S. missile system in the latter country could benefit Macau by diverting Chinese tourists away from South Korea and toward the special administrative region.
Silver Heritage’s Mr Green did highlight in his remarks some shortcomings of the firm’s own new project in Nepal, which is behind a previously-announced schedule and has required an enlargement of its budget. He also mentioned a shortfall in the 2016 results of its existing casino operations – based in several Asian and Pacific markets – compared to the numbers forecast prior to its August 2015 initial public offering on the Australian Securities Exchange.
He wrote: “While our full-year result for the 2016 financial year came in slightly better than was anticipated at the time of the progress report, it failed by some margin to meet our prospectus forecast.”
Mr Green added, addressing shareholders: “The board recognises that this is both an unacceptable and unsustainable result, and I assure you it is committed to implementing measures which will improve operational performance, see the completion and successful opening of Tiger Palace Resort Bhairahawa, and provide a platform for the pursuit of the future growth and value accretion opportunities available to your company.”
Recent project updates from the company have mentioned the new Nepal property opening in stages from August 2017, with a “resort and casino grand opening” in November 2017. Mr Green referred in his remarks to the property opening in “late 2017”.
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