Hong Kong-listed Suncity Group says it will continue to offload non-core businesses and assets in a bid to survive the challenges of COVID-19 and the arrest of its former Chairman, Alvin Chau, in November.
Publishing its FY21 financial results on Wednesday, which saw the company fall to a loss of HK$258.3 million (US$33 million), Suncity also outlined plans to shift its focus away from VIP gaming “as the Group continues to transform into a pan-Asian integrated resort operator” and see the company “targeting all traditional gaming business segments, including VIP, premium mass, mass, slots and non-gaming businesses in the Group’s integrated resorts.”
The company is a joint venture partner and runs casino operations at Hoiana in central Vietnam, is majority owner of Tigre de Cristal in Vladivostok, Russia, and is developing a US$1 billion hotel and casino in Manila’s Entertainment City precinct.
However, it sold off its the mainland Chinese property business last year as well as an aircraft once used to transport VIP customers. Suncity said Wednesday that it has also suspended the operations of its travel segment after its primary client, Macau junket operator Sun City Gaming Promotion Company Limited, had shut down, and may need to offload two land parcels the group owns in Japan.
Admitting there were material uncertainties which may cast significant doubt on the group’s ability to continue as a going concern, Suncity said it is consolidating all of its resources on survival.
“Intense cash preservation across segments [is] the Group’s highest priority,” it said. “Across the board, the Group executed the most uncompromising cost-cutting programme ever.
“Survival means chopping everything non-core. Underperforming non-core businesses have been sold and will continue to be sold, such as the disposal of the mainland Chinese property business and the aircraft in 2021.”
On the challenges facing VIP gaming in the region, Suncity said, “While Macau used to be the gaming mecca in Asia with VIP gaming as a major source of GGR in the past, more recently, the reliance on VIP business has already gone.
“The rise of the mega-rich and middle-class customers in South Korea, Japan, Singapore, Thailand, Malaysia, the Philippines etc are the fundamentals of demand for high-quality integrated resorts with a localised theme in Asia. There is fairly limited supply of VIP gaming facilities to cater to high-end demand since Macau has now virtually left the VIP junket business.”
Majority-owned subsidiary Summit Ascent Holdings recently announced that it was postponing development of Tigre de Cristal Phase II due to geopolitical tensions related to Russia’s war on Ukraine, but Suncity said Wednesday that it is powering ahead with its Manila casino development – describing the Philippines as “the bright spot for the Group.”
The company said, “The Philippines gaming sector is underpinned by a strong domestic market and a track record of double-digit GGR growth in Entertainment City prior to the pandemic.
“The gradual lifting of international travel bans in certain Asian countries, and their willingness to embrace living with COVID, offers the first glimpse of hope of normalisation in international travels. Westside City Project construction continues to go on despite COVID.
“Once Westside City Project is ready, it will become the newest attraction in Manila’s Entertainment City for Filipinos, Koreans, Japanese, Singaporeans, Malaysians, Thais and other South East Asian tourists alike.”
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