Macau casino investor Success Universe Group Ltd swung to a loss of HKD6.7 million (US$864,068) in the year ended December 31, compared to a profit of approximately HKD96.9 million in the prior year. It had given a warning in February that an annual loss was likely.
Success Universe is a joint venture partner – with a unit of Macau gaming operator SJM Holdings Ltd – in casino hotel Ponte 16 (pictured), on the Macau peninsula.
The group’s shared profit of the associates relating to Ponte 16 in the calendar year was HKD29.3 million, a fall of 66.7 percent from the approximately HKD88.1 million that was its share of such profit for 2014.
Success Universe noted in its Wednesday filing to the Hong Kong Stock Exchange that its 2015 group wide loss was also attributable to a decrease in lottery operating revenue and a move to a loss in that segment compared to a profit in the previous year. The firm has a sports lottery sales agency network covering several provinces in mainland China and in 2014 expanded into the China welfare lottery market.
Such lottery revenue fell 65.4 percent year-on-year, to approximately HKD69.6 million, contributing to a 2015 loss in the segment of HKD19.1 million.
The firm said in its annual results that “2015 was undoubtedly a challenging year globally; [the] Macau gaming industry was struggling amidst the transition of China’s economy and the structural change in Macau, while China lottery business was pending for further regulatory notification.”
The latter was a reference to a suspension of online sales of China lottery tickets announced early last year by the central authorities as a temporary reform measure. AGTech Holdings Ltd, another Hong Kong-listed operator in the China lottery market, said in its annual results this week it was hopeful new lottery regulations might be introduced this year.
Success Universe said that despite the downturn in Macau casino gaming revenue market-wide, Ponte 16 had outperformed the market in the mass segment, on which it increasingly focuses.
“During the reporting year, Ponte 16 has [had a] timely response to the change in tourist mix by allocating resources to serve the mass market and its revenue outperformed the market, where Macau’s GGR [gross gaming revenue] of 2015 decreased by approximately 34 percent year-on-year,” said the firm.
It didn’t give any numbers for Ponte 16’s casino GGR during the period. It did however give a number for adjusted earnings before interest, taxation, depreciation and amortisation in relation to casino operations of HKD303.7 million for 2015, compared to HKD461.0 million in 2014; a decline of 34.1 percent.
As of December 31, 2015, the casino of Ponte 16 had 108 gaming tables, consisting of 92 mass gaming tables, 9 high-limit tables and 7 VIP tables, as well as 13 mahjong tables.
“Although the structural change in Macau is expected to be persistent over the medium to long term, the group is optimistic about the future development of the gaming, entertainment and tourist-related markets in Macau,” said Success Universe. “Together with the infrastructure and other supporting facilities opening soon in and nearby Macau, such as the Hong Kong-Zhuhai-Macau Bridge, the group believes that Macau visitation will increase at a steady pace, which will support the growth of mass market gaming and tourist-related industries,” it added.
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”So far the Macau government has never failed us. And I think we have always been rewarded appropriately for the amount of investment”
Lawrence Ho Yau Lung
Chairman and chief executive of Melco Resorts and Entertainment