SunCity issues profit warning as chairman injects new cash
SunCity Group has issued a profit warning despite significantly reducing losses in the first half of 2020, while the business' chair Alvin Chau Cheok Wa is to provide an additional HK$6bn (£5853m/€648.6m/US$774.3m) in funding.
The operator said that for the six months to 30 June, loss attributable to owners of the business is expected to reach RMB108m, a significant improvement on the RMB1.25bn loss recorded for the same period last year.
During the period, for which SunCity expects to publish its full results on 28 August, revenue from travel and tourism operations was badly hit by the novel coronavirus (Covid-19) pandemic, due to travel restrictions imposed in Macau. This led to visitor numbers for the Chinese special administrative region plummeting.
Despite these difficult circumstances, the business said losses were reduced by an RMB596m gain from changes in the fair value of derivative financial instruments, compared to a RMB1.07bn fair value loss for the six months to 30 June 2019. This was partially offset by increased losses from investment property value changes, a loss from a joint venture, and increased finance costs.
Meanwhile, SunCity chair Alvin Chau Cheok Wa will provide the business with a further HK$6bn in funding, in the form of additional perpetual securities.
Chau also agreed to exchange existing shareholder loans totalling HK$3.88bn into perpetual securities. Under this arrangement, SunCity may choose to repay or not to repay Chau both the principal and interest payments from the tenth year after the loan was provided.
The business will use the funds to finance its integrated resort projects, for which it provides management and consultancy services to developers.
“SunCity Group is riding on the fast-track of integrated resort development,” Chau said. “I completely understand that a high growth company like SunCity requires a lot of funds to expand.
“As the largest shareholder, the largest creditor, and the chairman of SunCity Group, I am happy to dip my own pockets to ensure that SunCity’s expansion will go on,” he explained. “I am fully backing SunCity, and I am confident that SunCity will soon turn into one of the most aspiring leaders in integrated resorts in Asia.”
SunCity’s future plans include the opening of Hoiana, a new integrated resort project in Vietnam, which is due to open to the public next year. The facility staged a preview event in June, where visitors were able to experience a number of on-site amenities.