Paradise Entertainment Limited Issues Sharp Profit Warning for FY2025

Summary of Key Points

• The Group expects a significant drop in profit for FY2025: Anticipated profit of HK\$139.4 million, down 63.5% or HK\$242.5 million from HK\$381.9 million in FY2024.
• Major contributing factors include:
  • A decrease of HK\$85.2 million (11.9%) in revenue from the provision of casino management services in Macau.
  • A decrease of HK\$165.5 million (45.3%) in revenue from the sale and/or leasing of electronic gaming equipment and systems.
  • An expense of HK\$42.1 million related to employee compensation and benefits, including long service payments, due to the cessation of Casino Kam Pek Paradise operations.
• Termination of flagship casino management contracts:
  • The service agreement with SJM Resorts for Casino Kam Pek Paradise will not be renewed or extended after its expiry on 31 December 2025.
  • Casino operations terminated earlier than expected, ceasing on 2 December 2025, resulting in nearly one month of lost revenue for the Group.
• Market impact on gaming equipment sales:
  • Sales of live multi game (LMG) terminals weakened in 2025 versus 2024, likely due to customer anticipation of the upcoming “Black Coral” LMG system, planned for launch in 2026.
  • No revenue has been recognized for Black Coral yet, but its future launch is expected to drive replacement cycles and revenue growth.
• The Company’s annual results for FY2025 are still being finalized and may be subject to adjustments.

Details Investors Must Know

Paradise Entertainment Limited has issued a profit warning, forecasting a sharp decline in net profit for the year ended 31 December 2025. The expected profit of HK\$139.4 million is a substantial drop from last year’s HK\$381.9 million. This decrease is attributed to several factors that are likely to be price sensitive and could significantly affect the company’s share value.

Casino Management Services

The company’s revenue from casino management services in Macau fell by HK\$85.2 million (11.9%). A major reason is the non-renewal and early termination of the Group’s service agreement with SJM Resorts for the management of Casino Kam Pek Paradise. This contract will expire on 31 December 2025, but casino operations ceased as early as 2 December 2025, leading to a loss of nearly one month’s anticipated income.

Gaming Equipment Sales

Revenue from the sale and leasing of electronic gaming equipment and systems dropped by HK\$165.5 million (45.3%) compared to FY2024. In particular, sales of live multi game (LMG) terminals in Macau were impacted as customers delayed purchases, anticipating the launch of the innovative “Black Coral” LMG system in 2026. This new system is expected to feature advanced analytics and real-time gameplay data, potentially driving future revenue growth once it is launched.

Employee Compensation and Business Cessation Costs

The cessation of Casino Kam Pek Paradise operations resulted in additional expenses of HK\$42.1 million for employee compensation and benefits, including long service payments. These expenses are expected to be charged to the consolidated financial statements for FY2025.

Future Outlook

While the launch of Black Coral LMG system is anticipated to enhance player engagement and accelerate replacement cycles for existing terminals, revenue from this new system has not yet been recognized. The company expects Black Coral to drive future growth in the gaming equipment segment.

Investor Guidance

The Board cautions shareholders and potential investors that the unaudited financial results are preliminary and may be subject to further adjustments. The audited annual results announcement will be published by the end of March 2026. Until then, investors should exercise caution when dealing in the company’s securities.

Potential Impact on Share Price

• The significant drop in profit and revenue, early termination of casino operations, and ongoing uncertainty about future revenue streams are all highly price sensitive events that could negatively impact the share value of Paradise Entertainment Limited.
• Anticipation of the new Black Coral LMG system may offset some concerns, but its impact will only be realized in future periods.

Board and Company Management

The executive directors are Dr. Jay Chun (Chairman and Managing Director, also alternate director to Mr. Shan Shiyong, alias, Sin Sai Yung) and Mr. Shan Shiyong, alias, Sin Sai Yung. Independent non-executive directors are Mr. Li John Zongyang, Ms. Tang Kiu Sam Alice, and Dr. Liu Ka Ying Rebecca.

Disclaimer: This article is based on preliminary unaudited information released by Paradise Entertainment Limited and may be subject to further review and adjustments. Investors are advised to refer to the company’s official audited results and exercise caution when making investment decisions. This is not financial advice.

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