GGRAsia – Suncity listco loss in 2021, auditor issues disclaimer

Suncity listco loss in 2021, auditor issues disclaimer

Mar 30, 2022 Newsdesk Latest News, Rest of Asia, Top of the deck

Suncity Group Holdings Ltd, a Hong Kong-listed firm that runs and is developing – via connected firms – casino resorts in Asia Pacific, slipped to a HKD258.3-million (US$33.0-million) loss in 2021, versus a profit of HKD884.8 million in 2020. The company did not recommend a dividend for 2021.

The first-half results had nonetheless been helped by a gain of approximately CNY167.9 million (US$26.4 million) from the disposal of Access Achievement Ltd, a mainland China property business.

Suncity Group Holdings had been chaired by Macau junket boss Alvin Chau Cheok Wa, until his resignation in December, coinciding with his detention in Macau in November, on suspicion of promoting overseas gambling to Chinese customers.

The firm said in its annual report, filed with the Hong Kong Stock Exchange on Wednesday, that it was no longer able – as it had in previous years – to rely on Mr Chau’s financial support, and was yet to appoint a new chairman.

The firm’s independent auditor issued a disclaimer of opinion regarding the group’s annual results, with Suncity Group Holdings citing as the reason, “multiple uncertainties relating to” the viability of the business as a “going concern”.

The company said it had been taking steps to address issues raised by the auditor, including “negotiation for the disposal of certain of its non-core assets,” in particular, “land parcels in Japan,” where it had mulled creating tourism resort facilities.

The company’s 2021 loss was actually on revenue that grew 87.2 percent year-on-year, to HKD340.4 million.

Its annual loss on adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) actually narrowed to HKD70.8 million, from an adjusted EBITDA loss of HKD134.1 million in 2020.

The group said its 2021 loss was due to factors including finance costs of circa HKD283.9 million; and a share of loss of a joint venture in the Hoiana casino resort in Vietnam, of approximately HKD438.0 million.

As of December 31, Suncity Group Holdings held an approximately 34 percent indirect equity interest in Hoiana, through an investment in a joint venture. In 2021, Hoiana’s net revenue was approximately US$12.1 million, and its casino gross gaming revenue stood at US$20.8 million. The property’s adjusted EBITDA was approximately a negative US$29.0 million.

Other factors in Suncity Group Holdings’ annual loss included an impairment loss of approximately HKD287.1 million on property, operating right and equipment, relating to an indirect interest in Russian casino resort Tigre de Cristal.

In financial year 2021, Summit Ascent Holdings Ltd – another Hong Kong-listed company and that is associated with Suncity Group Holdings – had contributed via its 77.5 percent interest in Tigre de Cristal approximately HKD265.5 million revenue to Suncity Group Holdings.

But also contributing to the group’s 2021 loss were: impairment loss on equity loans to a joint venture of approximately HKD119.7 million; and impairment loss on loans to, and amounts due from, a joint venture of approximately HKD217.1 million.

Philippine firm Suntrust Home Developers Inc, which is 51-percent indirectly owned by Suncity Group Holdings, said in a Friday filing that it expected that a five-star hotel and casino complex Suntrust is promoting at the Westside City Project in Manila, in the Philippine capital, was still on schedule to start operation in 2024.

As of end-2021, Suntrust had cash and cash equivalents of approximately PHP6.15 billion (US$117.7 million), and commitments of approximately PHP23.38 billion for the construction of the the Westside City hotel and casino.