Net loss of 6 million for the year
Plummeting VIP revenues at Neptune Group’s three Macau VIP rooms have the junket operators looking for the door. According to Calvinayre.com, Neptune’s high-roller rooms at the Venetian Macao, Sands Macao and Grand Lisboa dropped 38.2 percent, 32.3 percent and 25.2 percent respectively for an EBITDA loss of HK$997.8 million ($128.7 million), a plunge of almost 293 percent year-on-year, for a net loss of $106.15 million in its financial year ended June 30. Neptune Group pointed to “the spectacular slowdown” in VIP gaming in Macau, and indicated it may move on if things don’t improve.
“The group may not resolutely continue its presence in the Macau VIP gaming industry anymore if this situation doesn’t correct itself in the coming years,” the firm said in a filing to the Hong Kong Stock Exchange. “Management now face pressing concerns, like scrambling to stem profit slides from weak turnover and trying to maintain a healthy cash flow to explore other business opportunities.”
The company is already looking at other business models, including “the money lending and securities investment businesses,” reported the website, to diversify its business and balance the losses. As for its long-term prospects in Macau, the company said it is “both skeptical and prudent,” about the presumed positives: new development on the Cotai Strip; a push to build the mass-gaming segment and nongaming amenities; and relaxed visa rules that will allow Mainland Chinese tourists to visit Macau more often and stay longer.
Reuters reports that until early last year, junkets accounted for almost 70 percent of monthly gaming revenues; now, they generate just half of that. Union Gaming analyst Grant Govertsen says the firm does not think Neptune will not leave Macau, but added, “We do believe that more junket closures are likely and that liquidity could increasingly become a concern that could drive further downside to the VIP story.” The contraction is expected to worsen due to fallout from the Dore Entertainment theft, in which a cage cashier allegedly made off with millions in high-roller money from three Dore rooms at Wynn Macau.
Meanwhile, the trial of Cheung Chi-tai, once a major shareholder in Macau junket runner the Neptune Group, has been rescheduled to late March 2016.
Cheung faces three charges of money laundering HK$1.8 billion ($US232 million) through his Hong Kong bank accounts.
As he awaits trial, Hong Kong authorities are expected to work with Macau officials to “disentangle some of the complex issues involved,” the website noted. The court has allowed Cheung to travel, but ordered him to pay an additional HK$100,000 in bail and check in with law enforcement twice a month to ensure he does not try to escape justice.
Cheung’s lawyer seemed to think the extra bail was unnecessary and no deterrent to flight. “If he wants to hide or run away, he could have done it a long time ago,” Kevin Tang told reporters. “Even if he hides in Macau, Hong Kong can’t do anything about it.”
