Junket may diversify into lending
Macau’s once-flush junket organizers continue to revamp their business models to stay afloat despite an almost two-year recession in the Chinese territory, which is also the world’s top gaming jurisdiction.
According to the Macau Business Daily, it hasn’t been easy to manage the loss of the VIP sector. Gaming promoter the Neptune Group, in a report just with the Hong Kong Stock Exchange, said the old model is “no longer sustainable,” and junkets must turn to alternate revenue sources, such as money-lending.
“We face a daunting challenge right now, seeing slumping profits and lackluster turnover from the existing business model,” said the interim report, which marks the first six months of the 2015-16 fiscal year. “The hope is our new business strategy to secure a stable investment return from other assets and money-lending business will provide us with some much needed leeway to weather such a tough moment.”
For the first half of the year, which ended in December, the company posted a net loss of HK$257.02 million (US$33.13 million). On a year-on-year basis, Neptune saw a net profit of HK$130.93 million.
“None of our VIP junket operators are collectively clear on when their situation is going to evolve as business is sluggish and the overall macro economy feels restive on the surface, tense underneath,” said the report.
It predicted another six to 12 months of downturn, and added if the current situation persists more than a year,” it will create “desperation among junkets,” which may be forced to bundle their bad debts and distressed assets and “sell them to third-party financial investors at a big discount.”
The company remains hopeful that new resorts on the Cotai Strip will spark a rebound.
“We hope these new projects stir up the momentum … and bring back nostalgia remembrance from prosperous days.”
According to the World Casino Directory, last fall Neptune considered shutting down its Macau operations completely. It operates VIP rooms at the Sands Macao, the Grand Lisboa and the Venetian Macao.
