GGRAsia – Loss of $152m from Macau legend, eyes Macau operations after 2022

Loss of $152m from Macau legend, eyes Macau operations after 2022

Gaming and hotel services company Macau Legend Development Ltd on Tuesday reported a net loss of just over HKD 1.19 billion ($151.7 million) for the year 2021, an improvement of 39 percent. 1% compared to the period of the previous year. The company said it would “explore various options” to continue operating the games in Macau beyond December 31 this year.

Macau Legend’s revenue in 2021 rose 62.1 percent year-on-year to nearly HKD 1.14 billion, according to a filing with the Hong Kong Stock Exchange. The company’s costs rose 28.9% year-on-year to nearly HKD 1.51 billion.

The group’s adjusted profit before interest, tax, depreciation and amortization (EBITDA) was negative HKD 300.3 million, an improvement from the last corresponding period, when it recorded an EBITDA loss of HKD 429.3 million HKD.

Trading in Macau Legend shares resumed on Wednesday, after the publication of its 2021 annual results nearly three months later than expected by Hong Kong stock exchange rules. The shares had been suspended from April 1.

The company runs three casinos in Macau – Landmark, Babylon (pictured) and Legend Palace – under a so-called services agreement with Macau licensee SJM Holdings Ltd. The company also owns a tourist resort called Macau Fisherman’s Wharf, a waterfront area near the Outer Harbor Ferry Terminal on the Macau Peninsula.

Macau Legend has also invested in the Savan Legend casino in Laos, which was closed for just over six months in 2021 due to the pandemic.

The group’s gaming revenue for the full year of 2021 rose 74.1% year-on-year to just over HKD 917.3 million. The company said the increase in gaming revenue was mainly due to “more visitors” from mainland China to Macau, which helped boost gaming revenue in its local operations, despite a decline in gaming revenue at Savan Legend in Laos.

In its Tuesday filing, Macau Legend blamed the 2021 annual loss on “social distancing measures and travel restrictions” imposed by government authorities as countermeasures against the Covid-19 pandemic. Such measures, the company said, “severely” affected “the tally of visitor arrivals to Macau and Laos” during the reporting period.

He added that his financial performance had been affected by impairment losses recognized for overseas projects located in Cabo Verde “due to adverse changes in the economic situation under Covid-19”.

Macau Legend also stated that it would “explore various options to continue to provide management or any other form of services related to gaming operations ‘in Macau’ after December 31, 2022, as permitted by relevant laws and regulations of Macao and will maintain close contact with SJM in this regard.

Macau’s six casino operators each have signed on June 23 an extension of approximately six months of their respective playing contracts, until December 31. The licenses were due to expire on June 26, but have been extended as authorities in Macau scramble to prepare for a new public tender.

Macau Legend had net current liabilities of approximately HKD 788 million as of December 31, 2021. The group’s total bank borrowings amounted to almost HKD 2.36 billion, of which HKD 207 million will need to be repaid within 12 months from the closing date, while its cash and cash equivalents amounted to HKD 133 million. These conditions have led the auditors of the firm to report “the existence of significant uncertainties” likely to cast significant doubt on the “ability of the group to continue its operation”.

Macau Legend said in a May 20 filing that a review by an independent consultant “did not find any irregularity” in the relations between the company and Levo Chan Weng Lin or its related entities.

Mr. Chan is the single largest shareholder of Macau Legend and has served as Executive Director, Co-Chairman and Managing Director of the company. The businessman was detained in Macau in January on suspicion of operating illegal gambling and money laundering operations.

Mr Chan rappointed to his management functions at Macau Legend shortly after his detention.

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