Suncity Group writes off US$6 million in 1H22 loan repayments on subdued revenue performance at Vietnam’s Hoiana

LET Group Holdings Ltd, formerly known as Suncity Group, says it has recognized 1H22 impairment losses of US$6 million on loan repayments and interest to the subsidiary that oversees its Vietnam integrated resort Hoiana, with further impairment expected over the coming years as a result of the COVID-19 pandemic.

The company published its financial results for the six months to 30 June 2022 overnight, falling to a loss attributable to equity holders in the company of HK$253 million (US$32 million) – reversing a profit of HK$384 million (US$49 million) in the same period last year.

The 1H22 loss was in part due to the absence of loan and interest payments by Gold Yield Enterprises Limited (GYE), a joint venture company involved in the development and operations of Hoiana and which is 50% owned by LET Group.

According to LET’s financial results, Hoiana generated total net revenue of just US$7.25 million in the first six months of 2022, up 7% year-on-year, although net gaming revenue declined by 12.4% to US$4.54 million.

The property reported an Adjusted EBITDA loss of US$25.8 million for the period, while LET’s share of loss of a joint venture reached HK$160.3 million (US$20.5 million), slightly narrowed from a HK$167.9 million (US$21.4 million) loss over the same period in 2021.

LET has previously provided loans to GYE totalling US$65.0 million and via three separate advances, the third of which held a maturity date of February 2022. The company said that, as of 30 June 2022, it has received no repayment of the principal amount or interest on this advance from GYE which was now in default.

It did, however, acknowledge that, “The ability of GYE to effect repayment of Advances A, B and C depends much on the financial performance of Hoiana, which is the sole investment and revenue source from which GYE may make repayment of these loans.”

As such, LET said it expects its revenue and cashflow to continue to be impacted through at least 2024, and has recognized impairment losses on the loans to and amounts due from GYE of a combined HK$47.3 million (US$6.0 million) for the six months to 30 June 2022.

It also noted that a full opening of Hoiana, which held its soft opening in June 2020, remains indefinitely delayed although the company “does believe that the Hoiana project could generate positive cash inflows in the long run soon after the COVID-19 pandemic is over.”

Group-wide, LET reported a 32% year-on-year increase in revenue from continuing operations to HK$190.4 million, mainly due to improved performance from its stake in Russian casino-resort Tigre de Cristal.

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