GGRAsia – Suncity listco swings to 1H profit, warns on going concern

Suncity listco swings to 1H profit, warns on going concern

Sep 01, 2021 Newsdesk Latest News, Philippines, Rest of Asia, Top of the deck

Suncity Group Holdings Ltd, a listed firm that runs and is developing – via connected firms – casino resorts in Asia Pacific, swung to a CNY209.0 million (US$32.3 million) profit attributable to shareholders in the first half, compared to a CNY118.6 million loss in the prior-year period. The listed firm is associated with Macau junket boss Alvin Chau Cheok Wa.

The above profit figure excluded just under CNY111 million attributable to holders of perpetual securities, which the company chose to consolidate in its profit figure.

No dividends were proposed, declared or paid for the reporting period, said the half-year announcement published on Tuesday.

The interim profit was supported by a gain of approximately CNY167.9 million from the disposal of Access Achievement Ltd, a mainland China property business.

Consolidated adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) from continuing operations improved to a negative CNY33.7 million, versus a negative CNY44.5 million for the six months ended June 30, 2020.

Revenue from continuing operations nearly doubled year-on-year, to just under CNY148.8 million, from CNY74.6 million on the first half a year earlier.

But the company issued a warning to the Hong Kong Stock Exchange in its interim filing on Tuesday, of “material uncertainty” related to its ability to continue as a “going concern”, due to the modest volume of its cash flow, versus its capital commitments.

Its cash outflow was circa CNY114.5 million in the half to June 30, and the company has a committed capital expenditure of CNY3.44 billion.

“The group is dependent on the financial support from Mr Chau, its controlling shareholder and related companies,” noted the filing.

“Should the financial support not be available, the group may not be able to fulfil its financial obligations as and when they fall due in the ordinary course of business,” it added.

“These conditions indicate that a material uncertainty exists that may cast a significant doubt on the group’s ability to continue as a going concern,” stated the document.

It outlined that during the reporting period, one new item of borrowing involved CNY124.8 million “secured and guaranteed by Mr Chau, the chairman and a director of the company,” bearing interest of 18.29 percent, and “repayable within four months”.

Casino projects, operations

The group is involved in the under-construction Westside City scheme, at Entertainment City, Manila in the Philippines, through a non-wholly owned subsidiary Suntrust Home Developers Inc.

It also runs a hotel and gaming business – known as Tigre de Cristal – in Primorye, in the Russian Federation, through Hong Kong-listed Summit Ascent Holdings Ltd. The latter company reported last week EBITDA of US$2.2 million for the first six months of 2021.

Suncity Group Holdings is also involved in a joint venture for the Hoiana casino resort (pictured) in Quang Nam province, Vietnam, which opened in late June 2020.

“As a tourist-dependent property, Hoiana was in loss making position and its performance was adversely impacted by the Covid-19 pandemic during first-half 2021,” noted the filing.

It further stated that due to the increase of operating cost in first-half 2021 after the preview opening in June 2020, “the share of loss of a joint venture has been increased from approximately CNY90.1 million to approximately CNY139.9 million”.

In a separate release, the company said the Hoiana property recorded first-half revenue of US$6.8 million, up 42 percent from the second half of 2020. Aggregate gross gaming revenue for the latest reporting period was US$13.0 million, an increase of 46 percent from the preceding six months.

Nonetheless, the property reported negative adjusted EBITDA to the tune of US$20.6 million, said the firm.

The Tuesday filing also noted with regard to the pandemic, that the “social distancing and travel-related measures implemented by governments to combat the spread of Covid-19 in the group’s operating and customer markets have deterred, disrupted and inhibited international travel in general”.

As a result, the “overall businesses of the group, especially… travel-related products and services in Macau and the hotel and gaming business in Primorye in the Russian Federation continued to be adversely impacted”.