Summit Ascent poised for Russia growth

    Summit Ascent holdings, which is building a casino in Vladivostok in the Russian Far East, is well placed to tap into underserved gaming demand in North Asia and has the potential to more than treble gross gaming revenue from 2016 to 2020, Goldman Sachs said in a research note. The investment firm has initiated coverage on the stock with a Buy rating and target price of HK$15.7, representing a 33 percent upside potential from current market prices. Gross gaming revenue may reach US$375 million in 2016, rising to $1.7 billion in 2020, it said. The lowest effective gaming tax rate globally, coupled with low labour costs should allow the company to offer attractive incentive programs. Summit, which is owned by Hong Kong billionaire Lawrence Ho, bought majority control of the casino project last month, buying out a local partner who is under investigation for an issue not related to the casino project. Ho’s flagship Melco International holds a 5 percent stake in the venture.
    Summit is in negotiations with the top junkets in Macau and plans to bring in VIP players by mid-2015. The casino is scheduled for a soft opening towards the end of this year. The downside risks include insufficient direct flights, regulatory changes, and competition from Japan and North Korea, the note said.