Hong Kong-based property giant Far East Consortium has unveiled its 1H24 results, showcasing a 14% increase in revenue from its gaming operations, primarily driven by its land-based casinos in the Czech Republic. This surge in earnings has prompted the company to pursue the spin-off of its gaming business on the Hong Kong Stock Exchange, aiming to unlock value and raise funds for its Palasino Group. While the overall group witnessed a remarkable 108% year-on-year revenue increase, challenges in the property development sector resulted in a 59.3% decrease in net profit attributable to shareholders.
Revenue Surge in Czech Republic Casinos:
Far East Consortium’s gaming business, operating under the “PALASINO” brand in the Czech Republic, reported a substantial 14% increase in revenue, totaling HK$151 million in the six months ending on September 30, 2023.
The revenue boost was attributed to the company’s three casinos and one ancillary hotel in the Czech Republic, showcasing a robust performance with consistent attendance and a loyal customer base.
Revenue Composition:
The majority of the gaming revenue was derived from slot machines, highlighting their popularity among patrons.
Table games also contributed to the revenue stream, showcasing a diverse gaming portfolio within the PALASINO brand.
International Presence:
Far East Consortium’s gaming footprint extends beyond the Czech Republic, encompassing three hotels in Germany and a hotel in Austria. The company’s international strategy positions it as a key player in the European gaming and hospitality sector.
Spinning Off Gaming Business:
Far East Consortium is actively pursuing the spin-off of its gaming business on the Hong Kong Stock Exchange.
The move is designed to unlock value and enable the Palasino Group to raise funds independently. Upon completion, Far East will retain a significant 73.21% stake in the newly listed entity.
Stake in Star Entertainment Group:
The company’s 2.81% stake in Australia’s Star Entertainment Group did not contribute to its income during the reporting period.
Star Entertainment Group’s ongoing regulatory challenges have impacted its ability to reinstate a dividend program.
Group-wide Financial Performance:
Far East Consortium witnessed an impressive 108% year-on-year increase in group-wide revenue, amounting to HK$6.3 billion.
Despite the revenue surge, net profit attributable to shareholders experienced a 59.3% decline. This was attributed to rising finance costs and increased selling and marketing expenses within the dominant property development business.
Far East Consortium’s 1H24 results underscore the resilience and growth of its gaming operations, particularly in the Czech Republic. The decision to spin off the gaming business reflects a strategic move to unlock its full potential and provide an avenue for independent fundraising. As the company navigates challenges in the property development sector, its diversified portfolio and international presence position it for continued success in the dynamic gaming and hospitality industry.