China Star Entertainment Ltd, a services provider in the Macau casino market and an investor in the Hong Kong film sector, swung to a net loss for 2016, despite higher group revenue.
Such loss was HKD335.61 million for the 12 months to December 31, compared to the HKD107.87-million profit recorded in the prior year. The firm did not recommend a dividend.
Group revenue rose 6 percent to HKD1.10 billion, compared to nearly HKD1.04 billion in 2015. But the cost of sales in 2016 leapt 70 percent, to HKD986.54 million, compared to HKD581.78 million a year earlier.
The group said the profit slump was mainly due to a 75 percent fall in gross profit, “due to significant decrease in revenue from service income from gaming operations as a result of the recession in gaming industry in Macau”.
Another factor was recognition of a loss amounting to approximately HKD222.93 million on a new film released by the group during the year.
China Star runs hotel services, food and beverage operations and marketing services for gaming at the 209-room Hotel Lan Kwai Fong (pictured), a casino hotel on the Macau peninsula that uses the gaming licence of SJM Holdings Ltd.
Hotel and gaming service operations swung to a 2016 loss of HKD44.96 million, compared to a profit of HKD62.28 million a year earlier. That segment’s revenue dropped by 22 percent year-on-year, to HKD686.43 million, compared to HKD877.91 million a year earlier.
China Star said in its annual results that with effect from October 30 it had terminated an agreement entitling the firm to a share in the profit stream from a Macau VIP gaming promotion business operating at the Grand Lisboa casino hotel.
The firm said the move was “consistent with the group’s long-term policy to focus its activities on the group’s other business.”
