Summit Ascent full-2019 profit soars, Landheer leaves

Mar 24, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Hong Kong-listed Summit Ascent Holdings Ltd reported on Monday total net revenue of HKD532.8 million (US$99.0 million) for full calendar year 2019, up by 15.0 percent in year-on-year terms, the company said in a filing.

Gaming revenue for the period was also up by 15.0 percent to HKD482.2 million, due to improved VIP and mass market performances.

Summit Ascent posted a profit of HKD82.0 million for the period, compared to a profit of approximately HKD7.6 million a year earlier. The firm is the lead promoter of the Tigre de Cristal casino resort (pictured) in the Russian Far East, with a 60-percent stake in the property’s operator Oriental Regent Ltd.

Summit Ascent announced in a separate Monday release that executive director Eric Landheer had tendered his resignation with immediate effect, “due to his personal disagreement on the strategic business development directions with the board.” Such disagreement included, according to Summit Ascent, different views on: “the company’s future investment plan and the allocation of financial resources; the company’s business development plan and its timing of implementation; and corporate governance matters in relation to future and/or potential actions of the company.”

Summit Ascent stated that – upon receiving Mr Landheer’s resignation notice – it “decided to exercise its discretion to terminate his employment with the company”. Therefore, he “ceased to hold any position within the group following the resignation.”

In its results announcement, the firm commented on the impact of the ongoing Covid-19 pandemic on its Russia operations. With effect from 20 February, the Russian government had implemented a temporary entry ban for Chinese nationals, including passport holders from Hong Kong and Macau, as part of its measures to curb the spread of the outbreak.

Summit Ascent said the move had “understandably had an adverse impact on our visitation to start 2020 and a negative impact on our rolling chip business in particular”. The company however noted that the winter period was typical a low season for Tigre de Cristal and stated: “… the impact has not been as pronounced as it would have been if the crisis occurred in the company’s peak summer months.”

The company added: “While it is still impossible to quantify the impact to our overall business due to factors like the length of the border closures and temporary drop in flight connectivity, we anticipate a quick rebound once we move past this challenging period.”

Moving Tigre up in the value chain

Hong Kong-listed Suncity Group Holdings Ltd – led by Alvin Chau Cheok Wa – became in 2019 the largest shareholder of Summit Ascent. The Suncity brand, controlled by Mr Chau, 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, including in Vietnam and Cambodia.

In a statement included in the results announcement, Mr Chau – who is also Summit Ascent’s chairman – said: “We are excited to apply our extensive experience in the rolling chip business to move up the value chain at Tigre de Cristal and have been rapidly making alterations and improvements to attract and retain our discerning clientele.”

He added that in his view Summit Ascent “fits well – within Suncity’s pan-Asian growth strategy and integrated resort portfolio – due to [Russia’s] low tax regime, professional workforce, and [Tigre de Cristal's] enviable geographic location in the heart of Northeast Asia.”

According to Mr Chau, a new VIP room under Suncity Group “is nearing completion” at Tigre de Cristal and “will welcome VIP guests soon.”

Additional non-gaming amenities to be added later this year at Tigre de Cristal “include a hotel extension with 30 new rooms” and more food and beverage offerings.

Summit Ascent said adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) stood at HKD214.8 million in 2019, up 18.4 percent compared to HK$181.4 million in 2018.

Adjusted property EBITDA margin increased to 40 percent in 2019, versus 39 percent in 2018, “demonstrating that the operating expenses of the company have remained relatively constant despite ongoing growth in revenues,” said Summit Ascent.

One of the main contributions to the 2019 results of Tigre de Cristal continued to be the casino’s rolling chip operation, which “primarily targets foreign players”. Summit Ascent stated that the firm’s rolling chip turnover declined from approximately HKD15.56 billion in 2018 to about HKD15.22 billion in 2019. Net win after all commissions rebated directly or indirectly to customers from rolling chip business increased by 11.8 percent year-over-year to HKD122.5 million last year.

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 swathe of North Asia, a region populated by consumers keen on casino gambling.

Phase two opening in 2022

The firm is also working on a phase two project for Tigre de Cristal. The extension had been once scheduled to open in 2019. “We have reviewed and are finalising conceptual designs, and are targeting an opening… in 2022,” said Summit Ascent.

It added: “This new integrated resort is expected to double our VIP and mass gaming tables, slots, and have at least twice the lodging capacity of our first property. Our plans include four restaurants and bars, additional retail offerings, and an indoor beach club and spa.”

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.

Mass table revenue at Tigre de Cristal increased by 4.3 percent year-on-year in 2019 to HKD174.14 million, said Summit Ascent. Slot machine revenue was up by 29.9 percent to HKD185.6 million during the period.

The board of Summit Ascent did not recommend the payment of any final dividend for 2019, as it already had happened in the previous year.

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