Hong Kong-listed Suncity Group Holdings has reported a net profit attributable to equity holders of the company of RMB786.4 million (US$119.6 million) in 2020, representing a significant reversal from a loss of RMB1.48 billion (US$225.8 million) in FY19.
The return to profit came despite a 67.4% year-on-year decline in revenue to RMB199.3 million (US$30.3 million) and was mainly attributable to gains on changes in the fair value of financial instruments and convertible bonds, plus a gain on the “bargain” purchase of a controlling stake in Summit Ascent Holdings. Summit Ascent subsequently became controlling shareholder in Oriental Regent Ltd, operator of Russian integrated resort Tigre de Cristal, in 2020 and currently holds a 77.5% stake.
Suncity Group provides services via five main business segments: property development, property management and leasing, hotel and IR consultancy services, travel related products and services, and integrated resort operations.
In 2020, Suncity’s travel business, Sun Travel, accounted for more than half of the group’s revenue despite its revenue falling from RMB525.5 million (US$79.9 million) in 2019 to RMB110 million (US$16.7 million).
The company’s share in hotel and gaming operations at Tigre de Cristal from its stake in Summit Ascent came in at RMB42.4 million (US$6.5 million), while rental income from its mainland China property management arm was RMB37.7 million (US$5.7 million), down from RMB44.8 million (US$6.8 million) in 2019.
Suncity’s hotel and IR consultancy services, which include services provided at Hoiana in Vietnam, fell from RMB14.5 million in 2019 to RMB7.9 million (US$1.2 million) in 2020 – despite Hoiana holding a soft opening in June 2020. Suncity Group owns a 33% stake in Hoiana, located near Hoi An in Vietnam’s Quang Nam Province.
Revenue from Hoiana’s operations amounted to just US$4.8 million, with the company revealing that it had recorded a loss from its share in the joint venture in 2020.
“Hoiana was opened for preview on 28 June 2020, which had been under construction in the first half of 2020,” Suncity said. “The time when Hoiana was ready for its preview was right in the middle of the pandemic, where there were no flights nor visas for foreign visitors.
“As a tourist-dependent property, Hoiana was in a loss making position during the year. Due to the increase in staff costs and pre-opening costs of Hoiana during the year, the share of loss of [the] joint venture has been increased from approximately RMB82.2 million (US$12.5 million) to approximately RMB246.6 million (US$37.5 million).”
Nevertheless, Suncity said it remains “long-term positive” about its integrated resort portfolio.
“The Group continues to progress at full speed on various projects across Asia,” it explained. “When the pandemic is over, the Group [will be] well-positioned to capture the growth in entertainment demand in Asia, thanks to the strengthened network of projects and the Group’s access to our proprietary customer database in Sun Travel.
“The Group continues to evaluate various integrated resort projects in Asia whilst we remain optimistic in the sector in the very long term.”