Hong Kong-listed New Silkroad Culturaltainment Ltd, which runs a foreigner-only casino operation in South Korea and hopes to develop its own casino resort in that country, posted a loss of HKD17.6 million (US$2.2 million) from continuing operations for the first half of 2019. That compared to a HKD14.6-million loss in the prior-year period.
The group’s two main sources of revenue for the reporting period were casino operations – via its existing MegaLuck casino operation (pictured) in the Jeju KAL Hotel on South Korea’s Jeju Island – and sales and distribution of wine and baijiu, a Chinese alcoholic drink.
New Silkroad told the Hong Kong Stock Exchange on Tuesday that gaming operations for the first half of 2019 generated revenue of HKD63.1 million, up by 16.2 percent in year-on-year terms. “Such increase was mainly contributed by the VIP gaming operation,” the firm stated.
Gaming revenue accounted for 43.2 percent of the group’s overall revenue in the first half of 2019, compared with a 36.0-percent share in the prior-year period.
“Benefitting from successful VIP gaming campaigns operated by our house team, gross profit of the casino business achieved a promising growth by 56.3 percent to approximately HKD18.9 million” in the first six months of 2019, said New Silkroad.
In its interim results New Silkroad stated that, despite the positive performance of its casino operation in Jeju, the firm maintained a “conservative” outlook on business trends at the property. That was due to “political tension between South Korea [and] its neighbouring countries, coupled with a change in our casino management team”.
New Silkroad said in March that Jeju’s governor had given a subsidiary of the group, Macrolink Glorious Hill Co Ltd, formal permission to pursue its new casino venture, Glorious Hill, on the island.
In 2017 New Silkroad announced that it had taken control of Macrolink Glorious Hill, putting money into it with a view to developing a big resort complex at Glorious Hill, including a “large-scale casino”.
“We are very excited that the formal development approval was granted by the governor of Jeju… such that we can initiate the funding process for the development of phase one of the Glorious Hill project,” said New Silkroad in its Tuesday filing.
The project will be developed in three phases, with the first one featuring “a five-star hotel with more than 580 guest rooms, which will be equipped with wide range of entertainment and recreation facilities, restaurants, high-end shops and hydrotherapy spa.”
A budget for the new Jeju casino resort scheme was not specified in the results filing. New Silkroad also did not make any specific mention of a casino in the resort in the latest filing.
New Silkroad additionally said it had “discontinued” an Internet-based peer-to-peer financing platform business in mainland China, called Niiwoo Financial. The firm had completed the acquisition of the platform in August 2018, in a deal under which the original shareholder, Paison Technology Group Ltd, continued to act as a nominee shareholder following the transaction.
“In an unexpected incident in late March 2019, the major shareholder of Paison Technology was arrested on suspicion of violation of People’s Republic of China law with regards to his personal business,” said New Silkroad in its filing. “Though his personal business did not relate to Niiwoo Financial’s operation yet his [alleged] misconduct has subsequently led to a disapproval of Niiwoo Financial’s application for the value-added telecommunication licence for operation of online peer-to-peer lending business in the People’s Republic of China.”
Such situation prompted New Silkroad to renounce the acquisition of Niiwoo Financial. The latter had been its main source of revenue in financial year 2018.
Peer-to-peer lending has recently become popular among some Chinese consumers that investment analysts have said found it hard to access loans via China’s conventional banking system. But a report in March from brokerage Sanford C. Bernstein Ltd noted that – on the Chinese mainland at least – such peer-to-peer lending had been facing regulatory headwinds starting from mid-2018.
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