Gaming | Suncity, Imperial Pacific issue profit warnings ahead of 2018 results

Macau junket operator Suncity Group has said it expects to record a loss for the year in its upcoming financial results to be released later this month.

In a filing to the Hong Kong Stock Exchange, the company said that it is expecting to rack up losses of approximately RMB864 million (MOP1.03 billion) based on a preliminary valuation of the board.

Suncity explained in the filing that about half of the loss was due to the change in fair value of derivative financial instruments, while a further RMB289 million was needed for litigation purposes.

The full-year 2018 results mark a steep drop from a year earlier, when Suncity recorded profit of about RMB128 million (MOP153 million).

Suncity group has been rapidly expanding its interest in casino operations across Asia, including projects in Vietnam, Cambodia and, most recently, upping its stake in the company that controls the Tigre de Cristal casino outside Vladivostok in Russia.

The announcement comes as Saipan casino operator Imperial Pacific International also issued a profit warning, saying that it expects to record a net loss when it publishes its 2018 financial results at month-end.

The company attributed the expected loss to falling revenue and the impairment of trade receivables – otherwise considered uncollectable gambling debts from high rollers either unwilling or unable to honor their loans.

But other pressures on the firm may also have contributed to the poor 2018 posting, including high turnover rates in the company’s senior management ranks, labor unrest over payroll disputes and typhoon-induced interruptions to its under-contruction integrated resort in Saipan.

In November last year rumors circulated on social media suggesting that the company was insolvent. Imperial Pacific denied the rumors and said that it would sue those “spreading slanderous fake news.” DB