GGRAsia – Macau services firm China Star Ent swings to 2016 loss

Macau services firm China Star Ent swings to 2016 loss

Mar 31, 2017 Newsdesk Latest News, Macau, Top of the deck

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.”