Suncity Group Comes Off Cheap, Cutting H1 Costs And Getting A Reduction In Yield

Article by : Helen Sep 8, 2020

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Suncity Group Holdings Limited is one of the largest gaming operators and developers in China. After introducing quarantine restrictions, the company’s business activities have witnessed colossal losses in the first half of 2020. According to official figures, the brand faced a 69.5% drop in revenue in the FSM. It is noteworthy that the current market value of the brand, on the contrary, increased due to convertible bonds. Thus, the operator’s net loss was significantly reduced.

Total revenue for the first six months of 2020 decreased to €11.56 million. Revenue from contracts with current customers reached 9.55 million euros. In comparison, income from the rental of premises and properties amounted to just over 2 million euros. The bulk of the company’s revenue came from the Asian region, namely Macau, which brought the company 7.71 million euros. The same figure for 2019 looked 74.4% more. SunCity’s pre-tax loss fell colossally from 155 million euros to 25.27 million euros. Meanwhile, the business recorded a tremendous loss of 40.97 million euros due to dramatic fair value changes in investment properties.

Without a doubt, the first half of the year was a challenging period for the company due to the consequences of Covid-19. The shutdown of many sectors of the economy instantly hit the country’s economy, which affected each of the businesses’ profitability.

Suncity Group is one of the largest investment holding companies. Its’ main activity falls in the development sector. The holding is actively developing 3 essential business segments, namely construction, sale and lease of premises, and gambling. One of the most profitable business sectors for a company is property leasing. The brand is engaged in the commercial real estate rental and earns additional income from management.

An equally important area that has recently begun to generate colossal profits for the Suncity Group is gambling. With the decline in demand for this type of service and casinos’ closure for wealthy tourists from China, the brand had to take desperate measures to reduce operating costs.

One of the largest gambling houses in Macau currently promotes and operates VIP lounges for gamblers throughout Asia. Even the consequences of the coronavirus did not become the final verdict for the largest operator. According to unofficial data, the brand could make millions of dollars in online games and proxy betting.

In this way, the company caused enormous economic damage to the Chinese government. The official data shows that Suncity Group has been able to earn substantial profits despite the gradual capital flight from China that the government faces every year. Games of chance are prohibited in mainland China. The only exception can be made only for companies registered in Macau. To avoid the enormous tax burden, the brand has resorted to a particular trick. Anyway, it didn’t manage to escape the authorities’ observation.

The gambling platform officially offered its customers to place bets using online services registered in the Philippines and Cambodia. Suncity Group used underground banks to withdraw China’s funds to avoid raising suspicion from the Chinese government.

The company’s official announcement says that the holding does not have a registered online gambling business and only conducts activities permitted by local authorities. The brand is listed on the Hong Kong stock exchange and does not officially include any junket operations. However, it is no secret to anyone that the company is generating colossal revenues from international online players. It seems that it is in no rush to share its profits with the Chinese tax authorities.