Paradise Ent posts 1H profit recovery on higher casino GGR
Casino equipment maker Paradise Entertainment Ltd posted a profit of HKD25.3 million (US$3.2 million) for the first six months of 2018, the firm announced on Wednesday. That compares with a loss of HKD40.2 million in the prior-year period.
First half 2018 revenue increased 15.2 percent, to 563.9 million, from HKD489.3 million a year earlier.
“The increase was mainly due to an increase in revenue from provision of casino management services as a result of an increase in gross gaming revenue (GGR) from the casinos under the group’s management, and an increase in revenue from sale of electronic gaming equipment and systems,” Paradise Entertainment said in a filing to the Hong Kong Stock Exchange.
Paradise Entertainment had already issued in July a “positive profit alert” to announce it expected to record a profit in its financial first half ended June 30.
Revenue from casinos under the group’s management was up 10.1 percent year-on-year, at HKD509.2 million.
The firm currently manages casino gaming at Casino Kam Pek Paradise on Macau peninsula under SJM Holdings Ltd’s gaming licence. It also manages casino operations at Casino Waldo also in downtown Macau, under the Galaxy Entertainment Group Ltd licence.
Total GGR generated by Casino Kam Pek Paradise for the period amounted to HKD687.5 million, representing an increase of 17.0 percent in year-on-year terms. Total GGR generated by Casino Waldo stood at HKD237.0 million, a decrease of 4.8 percent.
Revenue from sales of electronic gaming equipment and systems – via its LT Game brand – more than doubled in year-on-year terms, to HKD54.7 million, compared to HKD27.0 million in the first six months of 2017. The figure included HKD900,000 in “royalty income” from a deal with casino gaming equipment supplier International Game Technology Plc (IGT), down by 30.8 percent in year-on-year terms.
Paradise Entertainment in April 2016 agreed to transfer all of its electronic table game technology, patents and other intellectual property to IGT, with the exception of table game intellectual property used exclusively in Macau.
In Macau, Paradise Entertainment said it had deployed a total of 217 Live Multi Game (LMG) terminals and other accessories like X-Stadium at casino resort MGM Cotai, which opened in February.
Paradise Entertainment reported adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for the six months ended June 30 of HKD59.7 million, compared to HKD0.9 million a year earlier.
Adjusted EBITDA from the casinos under the group’s management was HKD78.5 million, an increase of 175.4 percent year-on-year. Adjusted EBITDA from the electronic gaming equipment and systems segment was a loss of HKD4.4 million, compared to a loss of HKD10.9 million for the first six months of 2017.
Paradise Entertainment said it increased its investment in research and development and other costs on new/upgraded electronic table game machines, slot machines and casino management systems, from HKD18.3 million for the first half of 2017 to HKD29.7 million for the six months ended June 30, 2018.
In June, Paradise Entertainment said it had struck a deal to buy warehousing space in Macau for HKD128.5 million. The agreement saw the company buy 33,000 square feet (3,066 sq metres) of industrial space at the Centro Polytex industrial building in Macau’s Areia Preta district, in order to store inventory. The transaction was funded by banks and from the company’s own reserves.
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