Casino services firm Macau Legend Development Ltd on Thursday reported a 21.1-percent year-on-year drop in revenue for the first three months of 2015. The company posted revenue of about HKD364.2 million (US$47 million) in the period, down from HKD461.4 million a year earlier.
The firm reported adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD74.9 million for the three months to March 31, down by 65.6 percent from the prior-year period.
Macau Legend is currently redeveloping Macau Fisherman’s Wharf (pictured in a rendering). The Harbourview Hotel, part of the redevelopment project, had a soft opening on February 2. The company plans to add two more hotels, scheduled to be completed in 2016 and 2017 respectively.
The firm announced recently that it had filed a request to the Macau government seeking permission to increase by 50 percent the building height limit on part of its waterside development.
On Thursday, David Chow Kam Fai, co-chairman and chief executive of Macau Legend, said an increase in costs – mostly staff costs – have impacted the firm’s first quarter results.
“In planning for our expansion, we retained and absorbed the gaming staff released from the junkets which left their VIP operations in the past few months at the Landmark Macau. This increase in staff costs has diluted our margin in the first quarter of 2015,” Mr Chow said.
The company operates the Babylon Casino at Fisherman’s Wharf and the Pharaoh’s Palace Casino at Landmark Macau hotel under a SJM Holdings Ltd gaming licence.
Hong Kong-listed Macau Legend said total gross gaming revenue of gaming tables decreased by 53.8 percent year-on-year to HKD1.1 billion in the first three months of 2015.
Gaming revenue for the period was down 26.3 percent from a year earlier to HKD242.1 million, while non-gaming revenue fell by 8.2 percent to about HKD122.1 million, the firm said.
Adjusted EBITDA from gaming services decreased by approximately 54.8 percent to HKD101.4 million, it added.
“Macro-wise, the overall market is going through a transitional period, during which the VIP, premium mass and mass market segments are all affected,” Mr Chow said, adding that some of the structural factors might “take time to improve”.
“However, the general consensus is that the current transitional period is likely to stretch well into 2016 before significant improvements will be effected,” he said.
Mr Chow added: “It should be noted that upcoming hotel and casino openings in Macau might add to price and margin pressures, but on the other hand, provide new stimulus to drive visitation to Macau as a whole.”
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Alvin Chau Cheok Wa
Chief executive of privately-held VIP junket business Suncity Group