GGRAsia – Summit Ascent 1H revenue, profit up on improved gaming ops

Summit Ascent 1H revenue, profit up on improved gaming ops

Aug 27, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck

Hong Kong-listed Summit Ascent Holdings Ltd reported total net revenue of HKD257.3 million (US$32.8 million) for the first six months of 2019, up 23.8 percent in year-on-year terms, the company said in a filing.

Summit Ascent, which is the lead developer of the Tigre de Cristal casino resort (pictured) in the Russian Far East, posted a profit of HKD42.8 million for the period, compared to a profit of approximately HKD2.6 million a year earlier, the firm said in a filing on Monday.

The company attributed the increase in revenue to an improvement in its gaming results for the first half of the year. Gaming revenue of Tigre de Cristal increased to HKD236.9 million, up 24.2 percent in year-on-year terms.

“Both our slot- and mass-table gaming segments continued their growth trajectory in the first half of 2019, and we saw a strong rebound on our VIP business versus the same period last year,” said Summit Ascent.

The firm stated that Tigre de Cristal’s casino rolling chip operation – which “primarily targets foreign players” – generated a turnover of approximately HKD8.36 billion in the first six months of 2019, a year-on-year jump of 28.5 percent. Net win after all commissions rebated directly or indirectly to customers from rolling chip business increased by 68.3 percent year-over-year to HKD69 million in the first half of 2019.

Summit Ascent said in its filing it expected to benefit from cooperation with Suncity Group Holdings Ltd, now its main shareholder. The latter firm controls a stake of approximately 28 percent in Summit Ascent, according to data disclosed in April.

Suncity Group Holdings is a Hong Kong-listed firm controlled by the boss of privately-held Macau casino junket brand Suncity Group Alvin Chau Cheok Wa. Mr Chau was appointed as Summit Ascent chairman in June.

The Suncity brand is best known for supplying high-value Chinese casino gamblers to the Macau market, but the listed company Suncity Group Holdings – which does not include any profit streams from Macau gambling junkets in its filed accounts – has been increasing its gaming investments into markets beyond Greater China. That is both in terms of new-build resorts such as Hoiana in Vietnam, due to open later this year; and in terms of deals to manage third-party-controlled properties in other markets, such as Cambodia.

The Suncity junket brand was mentioned recently in Australian media reports alleging that VIP gambling operations at Australian casino operator Crown Resorts Ltd had been infiltrated by criminals for the purposes of money laundering. The Suncity junket brand – which confirmed to GGRAsia last week it was closing for commercial reasons a VIP operation it had run at Crown Melbourne, in the Australian state of Victoria – has strongly denied any wrongdoing.

Strategic fit

Summit Ascent stated in its Monday filing: “Tigre de Cristal fits into the strategic roadmap of the Suncity Group to provide a diversified portfolio of gaming options for its players around the world.” Tigre de Cristal’s promoter added: “The comparatively low gaming tax rate in the Russian Federation enables [the property] to pay attractive rebates while maintaining solid margins, and Suncity [Group Holdings], as the single-largest shareholder of the company, captures the additional economics by using the equity method of accounting to share in the results of the group.”

Summit Ascent’s casino resort Tigre de Cristal, near the Russian Pacific port of Vladivostok, has been marketed by its promoter as within short flying time of a large portion of North Asia, a region populated by consumers keen on casino gambling.

Tigre de Cristal is currently the only casino property in operation in the Primorye Integrated Entertainment Zone (IEZ), a casino development area located 50 kilometres (31 miles) from Vladivostok. The Primorye IEZ is being promoted by Primorsky Krai Development Corp, a government-owned company under the Department of Tourism of Primorsky.

Summit Ascent also confirmed in its Monday filing it was delaying the opening of the second phase of Tigre de Cristal to “early 2022”. Such delay had been previously hinted by management.

“Due to expected redesigns with the input of Suncity, we are now targeting an opening of the first stage of our phase two development by early 2022,” Summit Ascent stated.

It added: “The first stage of phase two is expected to have more than double of the existing capacity in guest rooms and gaming facilities. It will also include four restaurants and bars, an indoor beach club, a duty-free shopping mall, and multipurpose [meetings and conventions] facilities.”

Earlier this month, the firm completed a share placement exercise, raising net proceeds of approximately HKD297 million to be used for the development of Tigre de Cristal’s phase two.

Summit Ascent stated in its Monday filing it was also adding a number of non-gaming amenities to existing phase one of Tigre de Cristal. These included more food and beverage options and a private club. “We are targeting completion of these enhancements by the first quarter of 2020,” the firm added.

The board of Summit Ascent did not recommend the payment of any interim dividend for the first half of 2019, as it already had happened in the prior-year period.