Imperial Pacific writes off $268m in bad VIP debts in H1 2017


imperial-pacific-bad-vip-debtsSaipan casino operator Imperial Pacific Holdings International (IPI) saw its revenue more than double in the first half of 2017 but rising expenses – including a steep hike in bad VIP gambling debts – kept a tighter leash on profits.

A filing with the Hong Kong Stock Exchange on Monday showed IPI’s gross revenue of HKD 7.3b (US$933m) in the six months ending June 30, an increase of 82.5% over the same period last year. But expenses more than tripled to HKD 2.9b, resulting in a more modest 26% gain in adjusted earnings to HKD 1.62b, while profit rose nearly 9% to HKD 912m.

VIP gaming accounted for nearly HKD 7.1b of IPI’s H1 revenue total, while mass market table games generated only HKD 147m and slots and electronic table games contributed a mere HKD 34m.

The H1 figures represent activity at the now closed ‘temporary’ casino Best Sunshine Live. In July, IPI transferred Best Sunshine’s gaming operations to IPI’s new permanent venue Imperial Pacific Resort • Saipan, which is still finishing work on its hotel and other non-gaming amenities.

Best Sunshine’s 16 VIP tables reported turnover of HKD 196.3b ($25.1b) in the first half of 2017, nearly twice the HKD 104.6b wagered in H1 2016. By comparison, the 32 mass market tables saw gaming drop rise 12.6% to HKD 463m.

IPI wrote off nearly HKD 2.1b in uncollectable VIP gambling debts during H1 2017, up sharply from HKD 847m in the same period last year. Total VIP debts stood at HKD 7.3b at the end of the period, up from HKD 5.3b in H1 2016.

IPI management stated in its filing that it plans to open more VIP gaming rooms at its permanent property by the end of the year. The company says it expects to commence collaboration with new junket operators (once they receive Saipan junket licenses) in order to ensure there’s sufficient volume to fill the new tables.

IPI recently announced plans to raise $51m via two bond placements in order to help finish construction of the hotel and villa complex of its new resort’s first phase. These rooms aren’t expected to be completed until August 2018 and IPI’s filing noted that the current supply of hotel rooms on Saipan “remains a serious bottleneck for the growth of tourist arrivals.”