Success Universe Ltd, the joint venture partner of SJM in the Macau integrated resort Ponte 16, has recently issued a profit warning for the first half of 2024 (1H24). The company’s projected profit for 1H24 is expected to decline sharply compared to the same period last year.
Profit Warning Details
According to a recent filing, Success Universe Ltd anticipates a significant reduction in its profit for 1H24. The expected profit for this period is projected to be between HK$30 million and HK$50 million, a stark decrease from HK$153.8 million reported in 1H23. This represents a substantial decline, with a decrease of up to 80% from the previous year.
Fair Value Loss on Equity Securities
Success Universe Ltd has experienced a fair value loss on its overseas listed equity securities. This marks a considerable turnaround from the HK$105.5 million gain recorded in the same period last year.
Investment Properties and Write-Down Impairments
The company also faced a fair value loss on its investment properties, along with a write-down impairment loss related to the carrying amounts of its stock of properties and leasehold land and buildings.
It is important to note that these losses are unrealized and non-cash in nature. This means they do not impact the company’s cash flows directly, although they affect the reported profit figures.
Previous Financial Performance
Success Universe Ltd had previously reported a profit attributable to the company’s owners of HK$169.3 million (US$21.6 million) for the fiscal year 2023. This marked a significant recovery from the HK$287.1 million (US$36.7 million) loss incurred in the prior year. This turnaround was partly attributed to the improved performance of Ponte 16.
Impact on Ponte 16 and Future Outlook
Success Universe Ltd, which manages the daily operations of Ponte 16, holds a 49% stake in the property’s operating entity Pier 16 – Property Development. SJM Resorts S.A. owns the remaining 51% stake. Despite the overall profit decline, the company has not yet commented on the specific performance metrics of Ponte 16’s gaming or non-gaming operations.
The interim results for the six months ending 30 June 2024 are expected to be published by the end of this month. These results will provide further insights into the performance of Ponte 16 and the impact of the investment losses on the company’s overall financial health.
Success Universe Ltd’s profit warning highlights the volatility in financial markets and the impact of unrealized losses on reported earnings. While the anticipated decline in profits is significant, the non-cash nature of the losses means that cash flow remains unaffected. Investors and stakeholders will be keenly awaiting the upcoming interim results to gauge the operational performance of Ponte 16 and the company’s future prospects.