Hong Kong-listed Summit Ascent Holdings Ltd reported on Thursday total net revenue of HKD470.6 million (US$60.0 million) for full calendar year 2017, up 46 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 HKD13.8 million for the period, compared to a profit of approximately HKD559,000 a year earlier.
The main contribution to the 2017 results of Tigre de Cristal came from the casino’s rolling chip operation, which targets VIP customers from Northeast Asia, the firm said in its Thursday filing. “Despite occasional inclement weather in the winter months, recent improvements in highway infrastructure, increased airline flight frequency and the free electronic visa policy in the Russian Far East, have lessened the impact of seasonal factors on our rolling chip business notably, compared to previous years,” the firm said.
Summit Ascent stated that Tigre de Cristal’s rolling chip turnover rose from approximately HKD14.1 billion in 2016 to about HKD18.8 billion in 2017. Mass table revenue increased by 13 percent year-on-year in 2017 to HKD132 million. Slot machine revenue was up by 21 percent to HKD120 million during the period.
The year 2017 “was the second full year of operation of our majority-owned hotel and casino resort Tigre de Cristal,” company chairman Kuo Jen Hao said in a statement included in the filing.
He added: “Tigre de Cristal generated an adjusted property EBITDA [earnings before interest, taxation, depreciation and amortisation] of HKD173.7 million for the year… representing a year-over-year increase of 32 percent. Most impressively, this was achieved during a period of substantial ownership changes at the Summit Ascent level, the changeover of chief operating officer at Tigre de Cristal, [and] policy uncertainties regarding gaming taxes in the Russian Federation as well as geopolitical instability in the region.”
In late December it had been announced that Asian casino investor Lawrence Ho Yau Lung had stepped down as chairman and non-executive director of Summit Ascent. The move followed Mr Ho’s decision earlier that month to sell off his 17.4-percent stake in the firm. The disclosure didn’t mention the reason for that sell-off decision.
In September last year, it was announced that then chief operating officer of Russian operations at Summit Ascent, Craig Ballantyne, was leaving to join Melco International Development Ltd, a firm controlled by Mr Ho. Mr Ballantyne was replaced by his then deputy at Summit Ascent, Stylianos Tsifetakis.
Last year it was also reported that the Russian federal authorities were to allow – via new legislation enacted in late November – those Russian special economic zones entitled to host casinos, to up the levies payable by operators. The monthly payable levy per gaming table was to range between a minimum of RUB50,000 (US$875.5) and a maximum of RUB250,000, and the levy for gaming machines was to range between RUB3,000 and RUB15,000. Only earlier this month the local government in Primorsky Krai in the Russian Far East – where Tigre de Cristal is located – confirmed it was to keep unchanged the tax burden on local casino resorts, at RUB125,000 per month for each gaming table, and RUB7,500 per month for each slot machine.
Summit Ascent said in its latest filing it expected to open the first stage of Phase II of Tigre de Cristal for operations “in the latter half of 2019”. The firm said it was “in the midst of finalising design and financing options so that we can commence construction.”
In a note on Summit Ascent following the company’s filing, brokerage Union Gaming Securities Asia Ltd noted that the local government in Primorsky Krai had “begun to take enforcement against some (but not all) of the numerous illegal gaming venues in and around Vladivostok”.
Analyst Grant Govertsen added: “This gives us some optimism as it relates to the outlook for mass and slots on a go-forward basis. We also believe this enforcement action resulted in some of the growth in mass volume (+21 percent) and slot volume (also +21 percent) during the second half of 2017, while another factor that drove growth included continued strong visitation trends to the region.”
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Andrew Lo Kai Bong
Executive director of project investor Suncity Group