SunCity narrows H1 losses despite revenue decline
Casino junket and integrated resorts operator SunCity Group has reported a 69.5% year-on-year decline in revenue for the first half of 2020, though fair value gains related to its convertible bonds significantly reduced the business’ net loss for the period.
Revenue for the six months to 30 June declined to RMB93.7m (£10.2m/€11.5m/$13.8m), of which contracts with customers accounted for RMB77.4m, and revenue from leasing properties the remaining RMB16.3m.
The vast majority of SunCity’s first half revenue came from Macau, which accounted for RMB62.5m of the total, down 74.4%. A further RMB10.9m was generated in Vietnam, where the business is providing management services for the new Hoiana integrated resort; RMB1.2m from Cambodia, and RMB2.8m from property leasing in China.
This decline in revenue resulted in cost of sales falling 74.2% to RMB65.8m, leaving a gross profit of RMB28.0m, down 45.8%.
However, SunCity’s pre-tax losses were significantly reduced, falling from RMB1.26bn to RMB204.9m. While the business recorded a RMB333.2m loss due to fair value changes in investment properties, as well as higher losses from joint ventures and rising administrative costs, this was mitigated by gains on the fair value of derivative financial instruments.
This related to the company’s convertible bonds, which increased in value by RMB588.2m, having seen their value written down by RMB1.07bn in H1 2019. After an RMB81.2m income tax credit, SunCity’s net loss for the first half came to RMB123.2m, compared to a RMB1.25bn loss in H1 2019.
This surpassed the projected RMB108m net loss the company said it was anticipating last month.
“It was undoubtedly a tough first half of the year as [the] Covid-19 pandemic has been bombarding all parts of the economy – travel bans, businesses halt, stock markets dwindle,” SunCity chair Alvin Chau Cheok Wa said.