Imperial Pacific profit warning on mounting VIP gambling debts


imperial-pacific-casino-profit-warningSaipan casino operator Imperial Pacific International (IPI) has warned investors of an expected profit plunge when it releases its H1 2018 results later this month.

On Thursday, IPI informed the Hong Kong Stock Exchange that it expects to record “a substantial decrease in profit for the six months ended 30 June 2018” compared with the same period last year. The company reported a profit of HK$912m (US$116m) in H1 2017.

The company claimed the profit decline is “mainly attributable to the decrease in total revenue and the impairment of trade receivables.” IPI famously avoided utilizing junket operators when it launched its temporary Saipan casino in November 2015, choosing instead to directly offer credit to VIP gamblers in order to reap a greater share of gambling losses.

That strategy isn’t without its pitfalls, as evidenced by the over half-a-billion US dollars the company wrote off as uncollectable VIP gambling debts last year. IPI is currently chasing a number of VIP deadbeats through the courts in the hope of reducing 2018’s expected write-offs.

The profit warning will only heighten speculation regarding the company’s admission last week that it failed to make payroll for its salaried employees. While IPI said Monday that it had met its outstanding payroll obligations, the company is also dealing with complaints from contractors regarding months-old debts that have yet to be honored. IPI also bid farewell to two board members — Cai Lingli and chairman Marco Teng – over the past two weeks.

On Thursday, the Marianas Variety quoted Gov. Ralph D.L.G. Torres saying he still had faith in IPI’s ability to complete construction of its permanent gaming venue, but cautioned that “if [IPI] are having a hard time, then they should let us know, so we’ll know what’s going on.”