GGRAsia – Macau Legend 1H loss widens despite jump in revenue

Macau Legend 1H loss widens despite jump in revenue

Sep 01, 2017 Newsdesk Latest News, Macau, Rest of Asia, Top of the deck

Casino services firm Macau Legend Development Ltd posted a net loss of approximately HKD228.6 million (US$29.2 million) for the first half of 2017. That compares with a net loss of nearly HKD175.3 million in the prior-year period.

The company said in a Thursday press release the widening loss was mainly due “to increases in operating costs and depreciation due to the opening of Legend Palace Casino and Hotel and an increase in finance costs”.

Macau Legend recorded total revenue of HKD855.9 million for the first six months of 2017, an increase of 28.5 percent in year-on-year terms. The firm said its cost of sales and services increased 16.4 percent year-on-year to about HKD612.8 million. Operating and administrative expenses for the six months to June 30 stood at HKD306.1 million, up 30.2 percent from a year earlier.

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

Legend Palace – the latest property from the Hong Kong-listed company – opened to the public on February 27.

Macau Legend has also “formally taken over” the management and operation of a casino scheme in Laos since September last year. The property – until recently known as Savan Vegas Hotel and Entertainment Complex – has been rebranded Savan Legend.

Gaming revenue at Macau Legend increased by 34.3 percent year-on-year to nearly HKD563.2 million in the first half of 2017, said the company. VIP gaming revenue was down 9.1 percent in year-on-year terms, to HKD80.6 million.

In the same period, market wide gross gaming revenue in Macau went up by 17.2 percent in year-on-year terms, according to government data.

“[The] newly opened Legend Palace Casino contributed [gaming] revenues of HKD137.5 million and Savan Legend Casino contributed HKD110.3 million,” the firm said. It added that total gaming revenue of Pharaoh’s Palace Casino and Babylon Casino was down by HKD104.1 million in year-on-year terms – or 24.8 percent – to HKD315.5 million.

As of June 30, Macau Legend had a total of 194 gaming tables in Macau, of which 171 were put into operation. The group had 72 gaming tables in operation in its Laos casino.

“Savan Legend has performed satisfactory and we are creating an operation and marketing hub in Laos targeting visitors from South East Asia,” company co-chairman and chief executive David Chow Kam Fai said in a statement accompanying the firm’s press release.

Macau Legend posted adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD100.5 million, up 115.4-percent from the prior-year period.

In July, Macau Legend announced it had signed a letter of intent to sell its Landmark Macau casino hotel. “The group received refundable deposits of HKD460 million in aggregate in July and August 2017,” Mr Chow said, referring to the transaction.

He added: “The deal is expected to conclude before the end of this year and the proceeds should bolster the financial strengths of the group. It will allow the group to reorganise, repackage and develop new construction and facilities.”

In September last year, Macau Legend said a previous letter of intent relating to the potential disposal of the Landmark Macau had expired without a deal being concluded.

Last year, 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 2016 of a EUR250-million (US$297.7 million) casino resort in the African island nation of Cape Verde.

The company is also continuing with its revamp of the Macau Fisherman’s Wharf complex. “The progress of construction of the dinosaur museum is smooth with a completion target within 2017,” the company stated in its results announcement for the first half of the year.

It added: “Plans include the construction of an opera house and an intelligent exhibition centre.”

Regarding the Legendale Hotel project – the fourth hotel to be developed at the Macau Fisherman’s Wharf complex – the firm said it was undergoing re-design “to meet the height requirements of the relevant government authority in Macau”.

The project has been facing some public opposition after Macau Legend applied to have the building’s height increased by 50 percent, to 90 metres (295 feet).