The January 2018 disposal of Macau’s Hotel Lan Kwai Fong lifted Hong Kong-listed China Star Entertainment Ltd to a profit of HK$1.47 billion in the 12 months to 31 December.
But the lucrative HK$2 billion sale to former Legislative Assembly member Chan Meng Kam’s Golden Dragon Group, which saw China Star discontinue its Hotel and Gaming Service Operations segment, appears to have heightened pressure on its remaining film and property development businesses.
The extraordinary profit arising from the Hotel Lan Kwai Fong disposal has at least bought the company some time, with China Star’s 2018 Annual Report, issued on Monday, revealing a 62% decline in revenue from continuing operations to just HK$3.5 million and a loss from continuing operations of HK$405.3 million compared with a profit of HK$110.0 million in 2017.
“Owing to the fact that [the film and property development] operations are not able to generate steady periodic revenue, the Group cannot provide stability in its yearly revenue,” said Chairman Heung Wah Keung in his Chairman’s Statement.
“A film is expected to release (in 2019) and generate revenue during the year, while the property development arm needs to have revenue in the year 2020.”
China Star had previously cited government regulatory policies and expected “uphill challenges in the near future” as the primary reasons for selling Hotel Lan Kwai Fong – home to 84 gaming tables and 65 slot machines in the casino as well as 209 guest rooms, a flower shop, retail shop and spa center in the hotel.
