GGRAsia – Paradise Ent 2019 profit plunges, ends Casino Waldo ops

Paradise Ent 2019 profit plunges, ends Casino Waldo ops

Mar 27, 2020 Newsdesk Latest News, Macau, Top of the deck

Macau-focused casino equipment maker Paradise Entertainment Ltd says its net profit attributable to shareholders for full-year 2019 fell by 98.4 percent from the prior year, on revenue that actually rose by 1.5 percent. Such profit was HKD926,000 (US$119,442) for the 12 months to December 31, 2019, compared to HKD58.2 million in 2018, said the company in a Thursday filing to the Hong Kong Stock Exchange.

Revenue for the reporting period stood at slightly above HKD1.18 billion, compared to about HKD1.16 billion in the whole of 2018.

Paradise Entertainment produces gaming equipment under the LT Game brand, and specialises in so-called live multi game (LMG) products – featuring a live dealer but automated betting and bet settlement.

The group also operates gaming floors and manages gaming operations in several Macau satellite casinos under the concessionaire system. That was the case at Casino Waldo, run under the Galaxy Entertainment Group Ltd licence, and Casino Kam Pek Paradise under an arrangement with SJM Holdings Ltd.

In Thursday’s filing, the company said it had “ceased providing casino management services” at Casino Waldo since March 1, 2020, after the expiration of the related service contract on February 29.

In a separate press release, Paradise Entertainment said the decision took into consideration the “recent requirement to invest further for additional monitoring system and equipment to Casino Waldo,” in order to comply with new regulatory requirements.

The group said it decided to cease the service contract at Casino Waldo because it was likely that such investment “might not be recovered before end of the existing gaming concession,” but also due to the “relatively high operating costs of the casino,” and the “adverse impact from the recent outbreak of a respiratory illness”. The latter was a reference to the Covid-19 pandemic – and the related travel restrictions and bans – that has negatively affected Macau’s economy, in particular the city’s gaming industry.

“The group shall then concentrate its focus on the operations of Casino Kam Pak Paradise so as to maximise the return from the provision of casino management service in this casino to the group,” stated Paradise Entertainment.

Higher sales

The company said sales of electronic gaming equipment and systems were up 91.5 percent year-on-year to just above HKD169.8 million, driven by the sale of 799 LMG terminals and the upgrading services to 1,051 LMG terminals in the Macau market. Including income from leasing and royalties, revenue in the segment was HKD177.6 million, up 82.5 percent from 2018.

Adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) from this segment was HKD5.4 million in 2019, as compared to a loss of HKD50.7 million in the prior year.

Paradise Entertainment said the operation of the casinos under the group’s management in full-year 2019 were affected by disruptions and “relatively high operating costs”. The segment accounted for nearly 85.0 percent of group-wide revenue in 2019, at HKD1.0 billion.

At Casino Kam Pek Paradise (pictured), gross gaming revenue (GGR) declined 11.3 percent year-on-year to HKD1.27 billion. The operation of the venue was affected by a temporary suspension of LMG terminals for upgrades under regulatory changes required for machines operating in the Macau market. That property nonetheless contributed HKD141.5 million to the group’s adjusted EBITDA in 2019.

At Casino Waldo, GGR increased by 8.6 percent year-on-year to HKD547.1 million. That casino however recorded a loss of adjusted EBITDA of HKD27.5 million, 13.6-percent higher than the HKD24.2-million loss recorded in 2018.

Group-wide adjusted EBITDA stood at HKD87.0 million in 2019, down 27.9 percent from the prior year, according to Thursday’s filing.

Paradise Entertainment managing director and chairman Jay Chun was quoted in the release as saying the company was now working to diversify its business, after gaining the approval in 2019 from the Macau gaming regulator for the company’s “self-developed slot machines”.

“We have also started to debut our self-developed slot machines to Americas and South East Asian markets in various casinos to emerge as one of the leading gaming companies,” said Mr Chun.

The executive however acknowledged that the Covid-19 pandemic would “inevitably have an adverse effect” on the group’s operation.