Paradise Entertainment continued to struggle during the second quarter of the year with Q2 2022 results once again suppressed by the lingering impact of the COVID-19 pandemic, subsequent shutdowns of properties, and reduction of operational capacity. The turbulent quarter in Macau, led to the group’s loss increasing to $12 million (HK97 million), up three times year-over-year.
Revenue in Casino Management Systems Takes a Hit
Paradise Entertainment had to navigate a challenging operational environment with finance and operating costs increasing, and revenue declining due to regional restrictions and lack of travelers. The company reported net revenue that was down 30% or $22.4 million (HK$181 million). Paradise’s overexposure to the Macau market had a negative impact on the overall results.
Macau was responsible for 88% of the revenue generated during the quarter, some $19.7 million (HK$159 million). Rest of the World added only $2.7 million (HK$22 million) to the group’s bottom line. Earnings filing to the Hong Kong Exchange outlined the challenges that the Group had faced since the outbreak of the pandemic.
The Group explained that the virus had had a significant impact on the operations and business environment in markets where the Group operates in, acknowledging greatly suppressed results for the period:
As such, the financial positions and performance of the Group were affected in different aspects, including an adverse impact on the revenue and the recognition of losses from both the casino management services segment and the gaming systems segment for the six months ended 30 June 2022.Paradise Entertainment Group
Hard to Materialize Strong Results Since Pandemic Started
Paradise Entertainment has been trying to diversify its business with the casino management system business bringing in 85% of the total revenue, but also declining by 32% on annual basis, down to $19 million (HK$154 million). The decline in overall revenue had a bearing on earnings per share, reported as a loss per share. Despite the grim financial spell, Paradise Entertainment wishes to stay optimistic about the future, but there is more.
Casino management could be further impacted, the Group confirmed, particularly if the contracts between SJM Resorts and the Macau government are not renewed. This is a material source of revenue for the Group and could have an adverse effect on the group’s business and financial position, along with its cash flows.
The company has hinted that it may pursue exploring satellite casinos as a viable business model for the future, although no definitive mention was made in the earnings statement. The Group confirmed that it would “stay tuned on the developments” of new gaming laws in Macau.