China Star posts 225 pct increase in loss in H1

Continues to pursue sale of Lan Kwai Fong Hotel to Paradise Entertainment

The current operator of Lan Kwai Fong Hotel, China Star Entertainment, Limited, saw a 225 per cent yearly increase in its loss during the first half of the year, according to the group’s filing with the Hong Kong Stock Exchange. In total, the loss amounted to HK$127.14 million (US$16.25 million).
During the period, HK334.27 million was generated by the group’s hotel and gaming service operations, while just HK$1.35 million was generated by its film business and HK$8,000 was earned from its property development operations.
The group notes that despite a gradual pickup in the gaming revenue during the period it would continue to pursue the sale of the three wholly-owned subsidiaries related to the property to gaming machine manufacturer Paradise Entertainment given that ‘it is the right moment for the group to realise considerable investment gain from this operation’.
The sale would be for a consideration of HK$2.38 billion.
Looking forward, the group notes that its ‘major future investment in Macau’ will be the development of a two-tower luxury and residential complex next to Hotel Lan Kwai Fong as well as a residential site in Nam Van lake, designated as Lot C7.
The group has outstanding commitments relating to the sites totalling HK$1.34 billion in project costs and a further HK342,000 in purchase and renovation and equipment costs.
China Star entered into a purchase agreement for Lot C7 late in April of this year, and notes that currently ‘an architect has been engaged and is still in the process of compiling a development plan’ for the property.
China Star purchased a company owned by its director Tiffany Chen Ming Yin, securing 50 per cent interest in the company that ‘indirectly owns’ the entire interest in the 4,669 square metre plot, according to the results.
The plot had originally been swapped with the government in a deal under former Secretary of Transport and Public Works Ao Man Long in August 2001, traded for two plots comprising 3,997 square metres and which made up the popular tourist attraction of the Mandarin’s House.