The Hong Kong-listed lottery solutions provider, AGTech Holdings, saw its income rise by 7.7% in the third quarter, helping the company to significantly cut its net deficit. This was achieved against the backdrop of a general improvement in lottery sales in China.
AGTech’s third-quarter loss shrank as the Chinese lottery market rebounded. Income for the third quarter of 2021 rose to HK$67 million (about £6.4 million/€7.5 million/$8.6 million), roughly in line with income in the first half of the year.
Most of this came from lottery hardware sales and services, which accounted for HK$39.1 million of total income, with another HK$9.5 million coming from lottery distribution and auxiliary services through physical channels.
From a lottery games and systems standpoint, AGTech generated HK$10 million in income from games and entertainment and HK$8.4 million from non-lottery hardware sales and services.
The rise in income, coupled with a slight decrease in operating costs, resulted in the supplier’s operating loss shrinking to HK$10.2 million for the quarter, compared to HK$18.9 million in the third quarter of 2020.
AGTech’s fair value change on financial assets held generated a profit of HK$3.6 million, and net financial income was HK$3.9 million, which helped improve its profit margin. This resulted in its pre-tax loss narrowing to HK$2.7 million. A HK$9,000 income tax credit meant its net loss also reached HK$2.7 million, a significant improvement from the HK$47.1 million loss a year earlier.
AGTechs fiscal performance has been robust in the third quarter, with income for the nine months concluding September 30 rising by 36% to HK$144.9 million.
At the same time, China’s Ministry of Finance reported that lottery sales reached 278.5 billion yuan, a substantial improvement from 2020 when the pandemic severely affected the market.
As the market recovers, AGTech has secured 20 lottery hardware bidding projects in the initial three quarters of this year, providing lottery terminals to sports lottery management centers.
A provider stated, “These successful bids further solidify the group’s dominant position in the Chinese lottery hardware market, and also show the group’s sustained competitiveness of lottery terminals.”
The company added, “Despite the ongoing worldwide COVID-19 pandemic, we have observed a steady recovery in the Chinese market since the resumption of lottery-related activities. The group will actively transform and strengthen its leading position in the Chinese lottery industry.”
The lottery hardware division has produced the majority of revenue so far this year, reaching HK$78.8 million, with an extra HK$28.8 million coming from distribution services.
Moreover, AGTech has expanded into other consumer areas, such as point-of-sale terminals for the Chinese retail market. This division was launched in 2021 and has generated HK$17.1 million in revenue so far this year.
Additionally, AGTech’s gaming and entertainment revenue totaled HK$20 million.
Over the past nine months, AGTech’s earnings hit a milestone of HK$100 million. A significant portion of this figure, HK$18.1 million, was generated by Paytm First Games, a mobile gaming and entertainment platform that caters to the Indian market.
After accounting for operational expenses, the supplier’s operating deficit for the initial three quarters experienced a substantial decline, dropping from HK$124.5 million to HK$65.3 million. Simultaneously, a decrease in investment losses contributed to a reduction in the pre-tax deficit to HK$48.3 million.
Following the inclusion of HK$1.9 million in taxes, AGTech’s net deficit for the nine-month period ending September 30 amounted to HK$46.3 million. This represents a notable improvement compared to the loss of HK$156.9 million recorded in the corresponding period of 2020.
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