GGRAsia – Summit Ascent 1H loss US$6mln, touts Manila investment

Summit Ascent 1H loss US$6mln, touts Manila investment

Aug 25, 2020 Newsdesk Latest News, Philippines, Rest of Asia, Top of the deck

Casino investor Summit Ascent Holdings Ltd, chaired by Macau junket promoter Alvin Chau Cheok Wa, reported a first-half loss of HKD47 million (US$6.1 million), compared to HKD42.8-million in profit in the first half of 2019. The firm - one of the backers of the Tigre de Cristal casino resort (pictured) in the Russian Far East – blamed travel restrictions linked to the Covid-19 pandemic, which had seen the casino resort shut from March 28 until its reopening on July 16.

The first-half loss announced on Monday was below the upper end of the range it had flagged in early August. No dividend was paid or proposed for ordinary shareholders.

Tigre de Cristal, the first operational casino resort in the Primorye Integrated Entertainment Zone near the Pacific port city of Vladivostok, had in recent years looked to target Chinese high roller gamblers.

The firm said it would be focusing, for now, on “its strength previously: the local market,” as “borders are still not yet fully opened” due to the impact of Covid-19.

Summit Ascent said it had a “strong liquidity position” and could operate “under this unprecedented period of ‘near-zero revenue’, for over 12 months from the end of the reporting period”.

The group also stated that – although the directors were “cautiously optimistic about the long-term prospects of Tigre de Cristal”, and intended to develop phase two of the resort as previously pledged – “they are of the view that it is in the best interests of the company to diversify its assets and revenue streams in order to reduce the group’s reliance on a single revenue source and location”.

Referring to a recent deal to fund a new Manila casino resort, involving Summit Ascent, the firm said, regarding another firm linked to Alvin Chau, Suntrust Home Developers Inc: “The investment in SunTrust marked the first step towards establishing the group’s footprint in the casino and entertainment market of the Philippines and allowing the group to tap into this growing market, as well as providing synergies to the overall tourism-related business in partnering with Suntrust and Suncity.”

Mr Chau’s Suncity Group junket brand had said it would like to bring Chinese and other high rollers to the new Manila project. The opportunities for Summit Ascent and its partners to bring Chinese players to Tigre de Cristal have been limited this year because of travel restrictions introduced as part of efforts to stem the coronavirus pandemic.

Chinese passport holders had been temporarily banned from Russia from February 20, which had an “adverse impact” on Tigre de Cristal’s first-half operations, “particularly in the rolling chip business” involving VIP players, said the firm in its Monday filing to the Hong Kong Stock Exchange.

Negative 1H property EBITDA

First-half 2020 adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) were negative by HKD22.1 million, compared to a positive number at HKD108.5 million in the first six months of 2019.

The group’s total revenue – from gaming and hotel operations combined – in first-half 2020 was HKD96.0 million, down 62.7 percent compared to the nearly HKD257.3 million of the first half last year.

Gross revenue from rolling chip business slipped 80.4 percent year-on-year, to HKD50 million, from HKD255.6 million.

Net revenue from gaming operations – including mass-market tables and slots – declined by 61.0 percent, to HKD92.3 million, from nearly HKD236.9 million a year earlier.

The management nonetheless stated that the reopening of Tigre de Cristal in July had “enabled upgrade works to continue”. They featured “a brand-new Suncity VIP room, authentic Korean and Chinese restaurants and an addition of 34 hotel rooms,” said the firm. “The upgrade is expected to be ready once the pandemic is settled,” it added.

Separately, regarding phase two of Tigre de Cristal, Summit Ascent reiterated the Suncity junket brand had provided “input” for “redesigns”.

It said the aim was for construction work on the US$200-million scheme to start in the fourth quarter, “targeting an opening in 2022”.

“As the company is interested in 60 percent equity interest” in Oriental Regent Ltd, the actual operator of the complex, “the estimated capital requirement attributable to the group is approximately US$120 million,” Summit Ascent noted.

Summit Ascent said the scheme was expected to “double” the group’s VIP tables, mass gaming tables and slots and have at least twice the 121-room lodging capacity of the existing property. It will include four restaurants and bars, additional shops, an indoor beach club and spa, it stated.