Suncity struggles laid bare in latest memo
Junket operator Suncity has seen its rolling chip volume recover to only one fifth of pre-COVID-19 levels.
A memo from Goldman Sachs reported by GGR Asia reports that the Suncity brand, namely Suncity Group Holdings, has seen its rolling chip volume recovery to about 20 per cent of pre-virus levels.
Hong Kong-based analysts Simon Cheung, Alpha Wang and Carrie Jang issued the note after the institution held a ‘Gaming and Conglomerates Corporate Day’ last Friday.
“Suncity commented that the pace of VIP recovery has so far been behind expectation.
“In response to the soft market conditions, it has decided to close down VIP rooms in Australia, South Korea and selective ones in Macau.”
The institution suggested that VIP gross gaming revenue in the Macau market only recovered to circa 20 per cent of the pre-COVID-19 level in December, “lagging behind” the overall Macau gross gaming revenue recovery pace for that month, which had moderated its year-on-year contraction to just under 66 per cent market wide.
Goldman Sachs said that the Suncity brand’s “bookings for the Chinese New Year holiday by its VIP customers are also relatively light.”
“Overall, the group is taking the view that the Asia VIP gaming market will take time and only recover gradually.”
High-roller players served in the Macau market by the Suncity brand had found it “quite troublesome to return” to the city, said Goldman Sachs.
The institution mentioned issues such as suspension in mainland China of self-service kiosks that could otherwise be used to make applications for a Macau trip using a mainland exit visa under the Individual Visit Scheme for independent travellers.
Goldman Sachs also flagged as a consumer barrier mentioned by Suncity, the need to undergo a COVID-19 test and show a valid certificate in order to seek quarantine-free entry to Macau from the mainland.
Nonetheless, Goldman Sachs said the Suncity brand had “no intention” of changing its strategy of “expanding into overseas markets in the next two to three years, building its own integrated resorts across Asia outside of Macau.”
The brand had “delayed the grand opening of the Vietnam casino, Hoiana, until the second half of 2021, while last week it announced that work on phase two of Hoiana would start this year.
Goldman Sachs added that via Suncity’s investment in Hong Kong-listed Summit Ascent Holdings “continues to operate Tigre de Cristal in Vladivostok,” Russia and was pursuing “the construction work” of a casino resort project in Manila.
In Vladivostok, the Suncity brand had budgeted to spend US$200 million for the phase three upgrade of Tigre de Cristal.
In the Philippines, the casino resort project “will cost US$1.2 billion and is expected to be completed in 2023.
“Altogether, the Suncity group would operate 680 gaming tables, 4000-plus hotel rooms and 3800 plus pokie machines by 2024 across all properties in Asia.”
The days of high-roller junkets in Australia could be numbered
High-roller VIP gambling tours have been identified as being a prime risk for money laundering and terrorism financing, wish most states washing their hands of regulating casino junkets.
News.com.au reported in November that Queensland is the only state authority to actively licence junkets, as both Victoria and Western Australia ditched the approval processes more than 10 years ago.
The controversial tours attract wealthy mainland Chinese gamers to Australian casinos for exclusive events.
Most states have now placed repsonsibility on individual casinos to ensure third-party junkets are complaint with anti-money laundering and counter terrorism financing laws.
The lack of oversight follows recent claims against Crown Resorts for allegedly allowing junket operators to launder money through its Melbourne and Perth casinos.
The allegations have raised doubts with the New South Wales regulator as to whether Crown is fit to hold a gaming licence for its new $2.2 billion Sydney Barangaroo venue.
A 2017 AUSTRAC report also flagged a lack of consistency by state gaming regulators when it came to the oversight of junkets.
“AUSTRAC found that there is an inconsistency between the states and territories in relation to the extension of the junket oversight they undertake,” AUSTRAC said.
“There is a limited extent which state-based regulation could be said to mitigate the gaps in AUSTRAC’s regulation of junkets.”