Macau Legend warns of HKD1.42 billion loss related to casino closure

In a profit warning statement filed with the Hong Kong Stock Exchange on Tuesday, Macau Legend Development Ltd. announced an expected loss of approximately HKD1.42 billion for the first half of 2025, primarily due to the impending closure of its Legend Palace Casino at Macau Fisherman’s Wharf.

The group’s board attributed the substantial increase in losses to the recognition of a “significant impairment loss” of about HKD1.29 billion related to the non-renewal of the service agreement with SJM Resorts S.A., which will expire on December 31, 2025.

The termination reflects SJM’s plans to close nine of its satellite casinos, including the Legend Palace Casino, retaining only two – Ponte 16 and L’Arc – as wholly owned properties.

Ultimately, Macau Legend’s subsidiaries, Macau Fisherman’s Wharf International Investment Limited and Hong Hock Development Company Limited, will cease casino operations in line with SJM’s decision.

Excluding the impairment loss and deferred tax effects, the company’s net loss still increased by approximately 21%, or HKD23 million, driven by a reduction in adjusted EBITDA from gaming operations by around HKD30 million, according to the filing.

This impact has already led to a 12% decline in total revenue for the first half of 2025 compared to the same period in 2024.

On June 9, Macau Legend announced the termination of its service agreement with SJM, stating it was informed that the contract would not be renewed due to SJM’s evolving regulatory environment and strategic adjustments.

The service agreement, originally dated December 30, 2022, covered services such as sales, promotion, advertising, customer development, and gaming coordination.

The company highlighted mitigating factors in its termination announcement, including expected regulatory changes effective January 1, 2026, and the board stated that Macau Legend had already been shifting its focus towards enhancing non-gaming businesses, such as hotel, convention, exhibition, food and beverage, and leasing services at Macau Fisherman’s Wharf to offset gaming revenue declines.

According to the company’s annual report, as of December 31, 2024, Macau Legend’s financial position reflected significant strain, with bank borrowings of HKD2.07 billion and shareholder loans of HKD339.4 million due within 12 months or on demand, compared with only HKD52.3 million in cash and bank balances.

In response to financial challenges, Macau Legend implemented a share consolidation scheme in July, reducing total shares from 10 billion to 1 billion, resulting in 620.11 million fully paid or credited as fully paid consolidated shares.

The company noted that “other than the expenses to be incurred in relation to the share consolidation and the change in board lot size, the implementation of the scheme will not alter the underlying assets, business operations, management, or financial position of the company nor the proportionate interests or rights of the shareholders.”

The consolidation was expected to be effective on September 4, 2025, after which trading would continue exclusively in consolidated shares.