The Hong Kong-listed lottery solutions provider, AGTech Holdings, experienced a 7.7% rise in income during the third quarter. This growth was fueled by a general improvement in lottery sales within China, which significantly reduced the company’s net deficit.
Income for the third quarter reached HK$67 million (£6.4 million/€7.5 million/$8.6 million), roughly aligning with the first half of the year.
Of this total, lottery hardware sales and services accounted for HK$39.1 million, while lottery distribution and auxiliary services through physical channels generated HK$9.5 million.
From a lottery game and systems standpoint, AGTech generated HK$10 million in revenue from games and entertainment, and HK$8.4 million from non-lottery hardware sales and services.
The increase in income, coupled with a slight decrease in operating expenses, saw the provider’s operating loss shrink to HK$10.2 million in the quarter, compared to HK$18.9 million in the third quarter of 2020.
A gain of HK$3.6 million from fair value changes on financial assets held by AGTech, and net financial income of HK$3.9 million, contributed to improved profitability. The pre-tax loss narrowed to HK$2.7 million. A tax credit of HK$9,000 meant its net loss also came in at HK$2.7 million, a significant improvement from the HK$47.1 million loss a year earlier.
AGTechs third-quarter results showed improvement, with earnings for the nine months ending September 30 rising by 36.0% to HK$144.9 million.
Information from China’s Ministry of Finance reveals that lottery sales reached 278.5 billion yuan in the first nine months of the year, a substantial increase compared to 2020 when the pandemic severely affected the market.
As the market recovers, AGTech has secured 20 lottery hardware bidding projects in the first three quarters of this year, supplying lottery terminals to the Sports Lottery Management Center.
The vendor stated: “These successful bids further strengthen the Group’s leading position in China’s lottery hardware market and demonstrate the continued competitiveness of the Group’s lottery terminals.”
“Despite the ongoing challenges and uncertainties of the global COVID-19 situation, we have witnessed a steady recovery in the Chinese market since lottery-related activities resumed,” the company added. “The Group will actively adapt and maintain its leading position in the Chinese lottery industry.”
The lottery hardware division also contributed the majority of annual income, reaching HK$78.8 million, with an additional HK$28.8 million coming from distribution services.
Moreover, AGTech has expanded into other consumer sectors, such as providing point-of-sale terminals for the Chinese retail market. This division was launched in 2021 and has generated revenue of HK$17.1 million to date.
Furthermore, AGTech’s gaming and entertainment revenue reached HK$20.
During the nine-month period concluding on September 30th, AGTech’s earnings hit a remarkable HK$1 billion. A significant portion of this revenue, HK$18.1 million, was generated by their India-focused mobile gaming and entertainment platform, Paytm First Games.
After accounting for operational expenses, the provider’s operating deficit for the initial three quarters experienced a substantial reduction, shrinking from HK$124.5 million to HK$65.3 million. Concurrently, a decrease in investment losses contributed to a reduction in the pre-tax deficit, bringing it down to HK$48.3 million.
Following the inclusion of HK$1.9 million in taxes, AGTech’s overall net loss for the nine-month period amounted to HK$46.3 million. This represents a notable improvement compared to the HK$156.9 million net loss recorded in the equivalent period of 2020.
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