Paradise Entertainment Ltd’s decision to split the firm’s board-chair role from December last year, marked its diversification into ‘green’ business areas beyond its core gaming interests, said founding chairman Jay Chun (pictured) and Leo Chan Kin Man, the group’s chief financial officer (CFO), in an interview with GGRAsia.
Mr Chun’s co-chairman, Zhang Jianjun is said to have 25 years of business experience in fields including investment banking, and asset restructuring and management.
Hong Kong-listed Paradise Entertainment has historically focused on casino gaming equipment manufacturing, and Macau satellite casino business principally via a long-standing service agreement with SJM Holdings Ltd for Casino Kam Pek Paradise, a property located in downtown Macau.
But Macau as a whole is now trying to diversify “from the traditionally dominant gaming sector”, noted Mr Chun, adding, “that is also what our company has been doing”.
The group’s finance boss Mr Chan stated: “Mr Zhang has the experience and know-how for investing in green projects.” He mentioned specifically, ‘smart charging’ within mainland China, for electric vehicles. That involves technology that recognises when a vehicle battery has reached maximum charge capacity, and reduces the risk of damaging a battery due to over-charging.
That sector is “highly competitive” in the Chinese market but has “great potential” in terms of demand, CFO Mr Chan remarked.
“Indeed, this has no direct relationship with gaming business. But both segments… involve the exploration of information and technological elements, which aligns to our company’s interests,” Mr Chan told GGRAsia.
An April filing by Paradise Entertainment said entry to China’s electric vehicle smart-charging market would help “diversify its income stream and potentially enhance its financial performance”.
Macau satellite casino outlook
Paradise Entertainment reported first-half revenue of HKD240 million (US$30.7 million) from its gaming management business at Casino Kam Pek Paradise, accounting for most of its group-wide HKD246.7 million revenue for the first six months this year. The firm saw its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) turn positive amid a gradual recovery in Macau’s gaming market following Covid-19 disruptions.
Mr Chun expressed caution though regarding the outlook for Macau satellite business in general, amid a Macau government requirement that such operations transition to a so-called management-company model at the end of a three-year grace period that started at the same time as the new gaming concession system on January 1.
Such management companies will not be permitted to share revenue with a satellite’s casino licensee, in a manner permitted previously. The new management entities are only allowed to earn a fee for gaming services they render to the gaming concessionaire that holds the actual licence for the venue in question.
“How to define the service fee [for the management company]? There is no template,” Mr Chun told GGRAsia.
Gaming concessionaires will also need to get approval from an incumbent Macau chief executive, regarding any service contract they might wish to have with a management-company partner.
Mr Chun says he would appreciate more “government guidance” on how a service fee can be structured for the management company. Most current Macau satellites rely on the gaming licence of SJM Holdings.
If, after the three-year grace period, “there are more satellite casinos closing,” SJM Holdings would have to “take in the [excess] casino workers,” said Mr Chun, referring to the concessionaire’s labour-market responsibilities. “What to do then? That will be a tough situation” for Macau, stated Mr Chun.
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