Chow Tai Fook Jewellery Group Ltd., has reported a full year profit drop of 46 percent as the Chinese economy beyond Macau gaming has continued to slow. Poor demand in Hong Kong, as well as Macau contributed to the massive decline for the world’s biggest publicly-traded jewelry store chain.
According to Bloomberg, Chow Tai Fook net income for the 12 month period ending March 31 was down nearly 50% over last year at HK$2.94 billion ($379 million) compared to the previous year. The outlet said the company’s stated revenues were in line with nearly a dozen analyst estimates they had compiled which averaged out to expected revenues of HK$3.19 billion.
Many Chinese shoppers who used to make up about 30 percent of Hong Kong’s retail trade are forgoing the nearby island for other destinations according to the report. Macau has seen a two year long gambling decline based partially on the Chinese economy, but most analysts believe that Beijing’s crackdown on corruption there has had the greatest effect on the decline.
“We expect the market environment for the region to remain challenging in the year ahead,” Chow Tai Fook said in the statement.
Chow Tai Fook Enterprises Limited is the majority shareholder of Chow Tai Fook Jewellery Group Ltd., among other companies., and is deeply involved in developing multi-billion dollar integrated resorts and casinos. The most recent publicity in the gaming world centers around the company’s involvement, through subsidiary Gold Yield Enterprises, with Macau junket operator Sun City and Vina Capital in developing the previously long-stalled Hoi An South Integrated Resort in Vietnam. Together the companies are investing some $4 billion in the IR with the first phase set to open by Q1 2019.
“The phase one integrated resort is due for completion in the first quarter of 2019 and will include approximately 1,000 lodging rooms [in] three hotels, residential villas and apartments along with a championship golf course, food and beverage offerings, retail areas and a variety of further leisure and entertainment facilities,” read a statement from Suncity as reported by World Casino News.
Chow Tai Fook Enterprises is also part of a joint venture with Star Entertainment Group and the Far Eastern Consortium who won the bid for a casino resort at Queen’s Wharf in Brisbane, Australia. That project is expected to open by 2022. The consortium was able to garner a license with effect for for 99 years which also prohibits any other casino from opening within 60 kilometers for the next 25 years.
It’s unclear whether the company has made any progress on their plans announced in early 2015 to invest over $2 billion in casino resort in the Incheon Free Economic Zone near South Korea’s Incheon International Airport.
As to the Jewelry division’s current fortunes, Chow Tai Fook plans to close outlets that are under-performing, with over 2,300 of the Mandarin and Cantonese shoppers’ favorites under the microscope and potentially on the chopping block. The company lists 19 outlets in Macau.