For the six months ended 30 September 2015, Emperor Entertainment Hotel Limited’s revenue declined 17.1 per cent to HK$873.4 million (US$112.7 million) compared to the same period of last year ‘amid a challenging macro environment in Macau’ according to a filing with the Hong Kong Stock Exchange yesterday.
The unaudited condensed consolidated results of the company also reveal that the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) and after non-controlling interests was HK$274.1 million (2014: HK$327.3 million).
In the interim result, the company added that the profit for the period attributable to the owners of the company was HK$111.5 million (2014: HK$263.7 million). Basic earnings per share were HK$0.09 (2014: HK$0.20). The Board declared an interim dividend of HK$0.028 (2014: HK$0.05) per share.
The company attributes the decline to a net loss on the hotel property valuation due to the downturn of the Macau property market, an exchange loss on offshore traded renminbi deposits held by the group due to abrupt devaluation of the renminbi in August 2015 and a moderate decline of revenue due to the economic downturn.
Gaming sector
During the period, the group’s gaming revenue declined moderately to HK$739.9 million (2014: HK$901.6 million), accounting for 84.7 per cent of the group’s total revenue. Nevertheless, the group managed to achieve a growth in revenue from the VIP room, leveraging its strong and loyal premium customer base.
In the 67-table mass market segment, gross win fell 30 per cent to HK$844.4 million. Revenue fell 29.9 per cent to HK$470.5 million. The segment accounted for 53.9 per cent of the group’s total revenue, compared with 63.7 per cent in the same period last year.
On the contrary, the group’s self-managed VIP room with 10 tables managed to generate an increase of 17.5 per cent to HK$252.2 million, compared to HK$214.6 million during the same period of last year, with a rolling amount of HK$10.2 billion. This accounts for 28.9 per cent of the group’s total revenue.
The gaming sector refers to the mass market hall, VIP room and slot machine hall operations and provision of gaming-related marketing and public relations services in the casino of the Grand Emperor Hotel in Macau. The Group’s casino is operated under the gaming licence held by Sociedade de Jogos de Macau, S.A.
In addition, the group’s hotel revenue derives from the hospitality income of Grand Emperor Hotel and the Inn Hotel Macau (formerly known as Best Western Hotel Taipa) which declined 12.2 per cent year-on-year to HK$133.5 million, accounting for 15.3 per cent of the total revenue.
Problems and solutions
The company pointed out that the Macau gaming market has undergone ‘a massive correction’ since the second half of 2014, amid deepening concerns over China’s economy and ongoing austerity initiatives.
Beside the general gaming industry downturn, and dwindling tourist traffic from Mainland China, the company added that ‘the appetite for gambling has further dampened in the wake of the recent stock market turmoil and the surprise devaluation of the renminbi.’
The company believes that the uncertainties in the macro economy, and the regulatory headwinds blowing across the gaming market, will continue to pose challenges to all gaming operators in Macau.
As demonstrated by a modest growth in the VIP segment, the company says that it believes its core strength lies in its proven capability to achieve high levels of customer satisfaction by offering unique gaming and hospitality experiences to guests.
‘The group remains committed to reinforcing its competitive edge in providing superior customer services, in order to be well-positioned to capture the full potential once the gaming market rebounds,’ reads the filing.
