Macau Legend 1H loss doubles, CEO bullish on future

Aug 19, 2016 Newsdesk Latest News, Macau, Top of the deck  

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Macau-based casino services firm Macau Legend Development Ltd posted a net loss of HKD175.3 million (US$22.6 million) for the first half of 2016. That compares with a net loss of HKD68.4 million in prior-year period.

The company said the widening loss was mainly due to “declining [gaming] revenue from mass market tables and outsourced VIP tables” and “a decrease in interest income arising from fixed deposits”.

Macau Legend recorded total revenue of HKD666.0 million for the first six months of 2016, a decrease of 4.6 percent in year-on-year terms.

The firm runs two casinos in Macau: Babylon Casino at Macau Fisherman’s Wharf; and Pharaoh’s Palace Casino at the Landmark Macau (pictured), both on Macau peninsula. The casinos are operated under the casino licence of Macau gaming operator SJM Holdings Ltd.

Gaming revenue at Macau Legend decreased by 6.8 percent year-on-year to HKD419.4 million in the first half of 2016, said the company in a Thursday filing to the Hong Kong Stock Exchange. In the same period, market wide gross gaming revenue in Macau declined by 11.4 percent in year-on-year terms, according to government data.

New Legend – Macau Legend’s self-run VIP operation – contributed HKD78.2 million in revenue to the firm during the first half, an increase of 25.7 percent from a year earlier. The firm confirmed it plans to feature self-run VIP tables at the Legend Palace casino hotel, a facility currently under development at Macau Fisherman’s Wharf. It is expected that construction of the casino hotel will be concluded next month, according to the firm’s Thursday filing.

Macau Legend posted adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD46.6 million, representing a 63.7-percent year-on-year decline.

In March, Macau Legend announced it had signed a letter of intent to sell its Landmark Macau casino hotel. The firm is meanwhile revamping waterside leisure facility Macau Fisherman’s Wharf: new non-gaming offerings being planned include a dinosaur-related exhibition and 1,000-seat theatre, both to be concluded next year.

Overseas projects

Last month, Macau Legend entered into a memorandum of understanding with the Setúbal municipality government in Portugal, for the proposed development of an “integrated leisure, tourism and entertainment project” there. It is designed to feature gaming elements.

The firm began construction in February of a EUR250-million (US$283.6 million) casino resort in the African island nation of Cape Verde.

Macau Legend is also preparing to venture into Laos. The firm announce in May it had reached an agreement with the Lao government to pay US$42 million for the right to operate a casino hotel in Laos known as the Savan Vegas Hotel and Entertainment Complex. The deal also includes the right to a 50-year monopoly on casino operations in three Lao provinces including the one where the resort is located.

Macau Legend has since postponed the deadline to close the deal to August 31. The closing date for the initial project development agreement will be automatically further extended to September 10 if necessary, the firm said in late July.

The Macau Legend shareholders on Thursday approved – in an extraordinary general meeting – the agreement to acquire the Savan Vegas complex. Meanwhile, an entity that claims to be backed by a global casino operator, said it also had submitted an offer to acquire the casino hotel.

According to Macau Legend, the Savan Vegas complex includes gaming amenities with 92 tables and 493 slot machines, along with a 472-room hotel, convention facilities, restaurants, bars, spa services and shops.

Despite the increase in net loss and decline in revenue, company chairman and chief executive David Chow Kam Fai said he was bullish about the future of Macau Legend.

“The past two years [represented] a very challenging environment in Macau,” Mr Chow said in a statement accompanying the firm’s first half results.

He added: “Locally in Macau, we are seeing trends showing that [visitor arrivals have] stabilised. We expect growth to gradually return in the foreseeable future, and the group is well positioned to capture such growth with our phased completion of the various projects in Macau Fisherman’s Wharf.

“Overseas, construction work at Cape Verde is progressing according to plan, and with Laos commencing operations, we are confident of seeing an upward trend in the group’s overall performances,” Mr Chow added.

In reference to the Savan Vegas acquisition, the Macau Legend boss noted that the property was already “a fully functioning entity”.

He added: “We intend to utilise our expertise, connections and experience to maximize its potential, with a view to bring positive EBITDA contributions once its results consolidate to the group.”

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