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IPI debt levels rise, construction woes persist Imperial Pacific International is facing mounting levels of bad debt due to its practice of extending direct credit to VIPs, while it continues to struggle to make headway on completing its hotel facilities.
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Furthermore, the company disclosed that 8 roblems for Saipan’s only operator continue to mount, with the company percent of its credit risk was concentrated on one recently denying persistent reports it sole high roller, while 23 percent of receivables has been the subject of a Federal Bureau were attributable to the top five customers. The provision for impairment of trade of Investigation raid. In its most recent results, the company receivables due from the group’s largest and posted stellar topline growth, though its the ten largest debtors amounted to HK$1.09 outstanding receivables and debt provisions billion and HK$1.86 billion, compared with nil also gained in tandem, with the figures showing and $83 million in 2016. The credit term for customers is generally a high degree of credit risk concentration on 30 days for gaming operations, with each given just a handful of clients. The company reported an almost three- a maximum credit limit. For new customers, payment in advance, or fold rise in gross revenue certain forms of guarantee for the year to HK13.2 are normally required. billion ($1.68 billion), Due to CNMI’s The company has although net profit fell had a relationship with by almost a third to lower tax regime, one junket operator since HK$637.5 million. VIP we believe we will August 2016, though at table games rolling of present it only accounts for HK$385.9 billion was be able to offer a small portion of revenue. up 53.6 percent yearvery competitive IPI says that as gaming on-year. Mass, slots facilities are expanded and ETG revenue edged commission rates and the resort is able to slightly higher. to our gaming offer more VIP amenities, The results were hit it expects to attract more by rising bad debts, as promoters, gaming promoters, once well as higher operating they receive a license to expenses, with most of operate on Saipan. the company’s business “Due to CNMI’s lower tax regime, we believe coming from direct marketing, rather than we will be able to offer very competitive comthrough junket operators. “The growth in VIP gaming revenue is mission rates to our gaming promoters,” it said. However, some in the industry are less attributable to the group’s effective marketing campaigns and increasing tourist visitation to optimistic about the appeal to junket operators. “The one official junket is a really, really CNMI,” the company says. “Our VIP customers primarily consist of credit players. Geographically, small Korean guy,” said Ben Lee, Managing most of our direct VIP customers are come from Partner of gaming consultancy firm iGamix China, Hong Kong, Macau and Korea,” it adds. Management and Consulting. “They were IPI says its “seeks to maintain strict control” trying to get the big Macau junkets interested over outstanding receivables. However, at the but none of them were.” Before the opening of the casino in end of 2017, the company had VIP gambling debts of HK$8.5 billion, up from HK$5.3 billion Garapan in July last year, Imperial Pacific was in 2016. Impairment losses came in at HK$4.75 operating out of a temporary facility with just billion, a nearly nine-fold increase on the HK$547 48 gaming tables and 141 slot machines. Since the transfer to the new property that has risen million the company booked in 2016.
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Asia Gaming Briefings | May 2018
to 77 tables and 242 slot machines at present with maximum capacity of up to 193 tables and 365 slot machines upon completion. From the outset, the high level of VIP rolling volume being generated from such a small number of tables raised eyebrows in the industry, as did the level of pledged investment. The company beat out Marianas Stars Entertainment for the right to operate the casino in 2014 and shortly thereafter promised to invest $7.1 billion on the South Pacific island, which has abundant natural beauty, but limited tourism infrastructure. A lack of available hotel space has been identified as a key factor holding back tourism growth.
