3 minute read
RUSSIA
Summit Ascent seen poised for VIP boom
Summit Ascent Holding’s Tigre de Cristal resort in Russia’s Far East is seen as well positioned for significant growth in VIP revenue, helped by the entrance of junket investor Suncity Group Holdings as its major shareholder.
Advertisement
Suncity Group, the listco of Macau’s largest junket operator, announced in April that it had bought a further 24.68 percent stake in Summit Ascent for HK$717.8 million ($91.5 million) as it seeks to build an “integrated tourism-related platform.”
The purchase takes the group’s total interest in the operator of the Tigre de Cristal in Russia’s Primorye gaming zone to almost 28 percent. The price per share was HK$1.94, which represents a premium of about 31.08 percent to the closing price as of the April 23rd date of the agreement, Suncity said in a filing to the Hong Kong Stock Exchange.
Commenting on its reasons for the acquisition, Suncity said the group wants to build an integrated tourism-related platform through equity investments as well as provide tourism-related services to the resorts.
“The company aims to increase its investment in tourism related property projects regions other than China, among which, the company believes that Russia is a favorable place for investment,” it said in the filing.
Russia was in the top three, after the United Kingdom and France, most popular European travel destinations for Chinese tourists in 2018. Overall tourism to Primorye has been growing at an annualized rate of over 30 percent over the past five years, helped by improving transport links. Direct flights from key feeder markets rose by 40 percent year-over-year.
Suncity said the timing was right for the acquisition as Summit Ascent is about to start on the Phase II expansion of the resort and the stake will give it more influence in the project.
Hong Kong-listed Summit Ascent has begun preparatory works for the construction of villas and serviced apartments next to the resort, which will increase accommodation capacity by about 50 percent when they are completed in early 2020.
“In addition, we plan to finalize the revised designs and financing for our Phase II project in the coming months and are now targeting an opening in the summer of 2021,” Summit Ascent Chairman Kuo Jen Hao said in the company’s annual report.
Analysts have said Summit Ascent is in a strong position to almost double its VIP business by 2020 after its second-half 2018 results topped expectations.
Union Gaming upgraded its rating for the operator to a “buy” after the release of results, which were helped by improving VIP revenue and continued strong growth in mass and slots.
“We see significant upside potential with respect to the company’s VIP program on a go-forward basis,” it said, adding that it is also likely to benefit from the cluster effect of an expected opening of a project by NagaCorp later this year.
Group profit for 2018 was HK$4.1 million, compared to a loss of HK$10.0 million for the prior year. Total revenue for the year was HK$463.2 million, down 1.6 percent year-overyear, partly due to the weakening Russian rouble.
For H2, revenue declined 4 percent to $255.4 million, above Union Gaming’s forecast for $246.6 million. VIP volume in 2H18 was $9.1 billion, down 13 percent but well above the firm’s forecast for $7 billion.
“Upside to our expectations came from some number of returning junket agents and players who had been trialing other new(er) regional casinos, particularly in Korea. Given the superior economics Summit Ascent is able to offer junkets (Vladivostok has the lowest gaming tax regime in all of Asia), as well as political sensitivities of China/Korea, this dynamic is not surprising.”
“With Suncity now in the mix, and under the assumption that both physical and HR infrastructure will be put in place over the course of 2019, we look for 2020 to experience significant growth in VIP volumes,” the firm said.
Russia to ban online instant-win lottery
Russia plans to ban sales of online instant-win lottery games, claiming they are too close to online casino games, which are not permitted in the country, local media reports.
The Ministry of Finance is currently preparing legislation to implement the ban. The government has also approved a China-style ring fence of its domestic internet system.
The “Runet” bill aims to wall off the country’s internet from the outside world and has been promoted as a way of ensuring the operation of online services in the event of foreign meddling.
