Hong Kong-listed LET Group has announced that it expects to report a loss for the first half of 2024. This anticipated financial downturn contrasts sharply with the profit reported during the same period last year, despite favorable returns from its investments in key international resorts.
Financial Performance Overview
LET Group’s forecasted loss for the six months ending June 30, 2024, marks a significant deviation from the HK$450.6 million profit recorded in the first half of 2023. The company attributes this reversal largely to the absence of a reversal of impairment losses and significant exchange losses.
In the first half of 2023, LET Group benefited from a notable reversal of impairment losses amounting to HK$413.2 million. This financial adjustment had a substantial positive effect on that year’s results. However, in the current period, there has been no such reversal, which has heavily impacted the company’s financial performance.
Additionally, LET Group reported net exchange losses totaling HK$179.2 million. Although some of these losses were mitigated by other positive financial developments, they nonetheless contribute to the expected overall loss for the period.
On a more positive note, LET Group’s share of profit from joint ventures has increased significantly. The company’s share of profit from Hoiana, a Vietnamese integrated resort where LET Group holds a 34% stake, reached approximately HK$234.3 million in 1H24. This figure is more than double the HK$124.1 million reported in the same period last year, reflecting strong performance in this key investment.
Summit Ascent Holdings’ Performance
Summit Ascent Holdings, a majority-owned subsidiary of LET Group with a 69.66% stake, is expected to report a profit of around HK$5.8 million for the first half of 2024. This is a notable improvement from the HK$16.1 million loss recorded in the corresponding period of 2023. The turnaround is attributed to several factors, including increased revenue and decreased exchange losses.
Revenue from gaming and hotel operations at Tigre de Cristal, located near Vladivostok, Russia, increased by 4% to HK$189.9 million. This growth has been a significant contributor to Summit Ascent’s improved financial results. Additionally, the company has reported a 37% reduction in exchange losses, now approximately HK$22.0 million, which has positively impacted its financial performance.
Another contributing factor to the improvement is a 26% reduction in depreciation and amortization expenses, totaling HK$29.5 million, which further supported the financial turnaround for Summit Ascent.
Reporting Delays and Management Changes
Both LET Group and Summit Ascent Holdings have announced delays in their financial reporting. They will not meet the August 31 deadline for publishing their final results for the first half of 2024 due to ongoing discussions with auditors. Moreover, the companies have yet to release their full-year results for 2023, following a significant walkout of directors earlier in the year. This departure came after news that LET Group had been discreetly exploring the sale of its Tigre de Cristal interests.
While the proposed sale of Tigre de Cristal did not materialize, a future sale has been approved by shareholders. LET Group’s chairman, Andrew Lo, retains a controlling interest in the company, which adds another layer of complexity to the ongoing financial situation.
Implications
The anticipated loss for LET Group in 1H24 underscores several key issues affecting its financial health. The absence of a reversal of impairment losses, which had previously boosted profitability, highlights the significant impact such financial adjustments can have on overall results. Furthermore, the reported exchange losses illustrate the risks associated with currency fluctuations and their potential effect on financial performance.
Despite these challenges, LET Group’s investments continue to yield positive returns. The increased share of profit from Hoiana and the improved performance of Tigre de Cristal indicate that the company has strong revenue-generating assets. These positive developments suggest potential for future financial recovery once the current issues are addressed.
The delays in reporting and recent management changes introduce additional uncertainties. Stakeholders and investors will need to monitor how these issues are resolved to better understand the company’s long-term strategy and outlook.
While LET Group faces a difficult first half of 2024 with projected losses and financial uncertainties, its investment portfolio remains robust. The resolution of reporting delays and management challenges will be crucial in determining the company’s future performance and stability.