Genting group is finally realising its dream of gaining a foothold in Macau - the Las Vegas of the east.
Partnering tycoon Stanley Ho Hung-sun, Genting group through its units Star Cruises Ltd in Hong Kong and Genting International Ltd in Singapore will invest HK$4.7bil to build a hotel and a casino near Lago Nam Van in Macau.
The Macau venture is another milestone in Genting group's journey to becoming an international casino player. It already has presence in Malaysia, Singapore, Britain and the US.
“Genting Bhd is a different animal now. It is growing big in the international gaming arena,” said Kurnia Insurans (M) Bhd chief investment officer Pankaj Kumar.
He noted that Genting shares should be rated at par with those of US casino owners, which were currently trading at a “high 20s” price-earnings (P/E) ratio.
According to the IBES consensus estimates, Genting shares are traded at a P/E ratio of 18 times, implying the stock is undervalued compared with its international peers.
Genting had four years ago made a bid for one of three casino licences offered by the Macau authorities when the gaming sector was opened to foreign players after Ho's licence expired.
Ho, Nasdaq-listed Wynn’s Co and Hong Kong-based Galaxy Resort & Casino won the three licences.
Now, the partnership with Ho will enable Genting group to tap the world’s biggest gaming market.
Ho’s son Lawrence once commented: “There are 1.3 billion people living within three hours’ flight from Macau. And 100 million people are within the radius of a three-hour drive.
“Nowhere else in the world has (a casino) such an advantage, not even in Las Vegas or Australia.”
Ho currently owns more than 15 casinos in Macau.
Part of the deal with Genting involves Ho’s wholly-owned company Profit Boom Investment Ltd taking a stake in Star Cruises, which is involved in Singapore’s second casino.
In a statement, Ho said the acquisition in Star Cruises was his personal investment. “It has nothing to do with any of my publicly listed companies,” he said.
Macau’s gaming revenue surged to US$6.95bil last year from US$5.6bil in 2005, surpassing Las Vegas which was estimated to have achieved US$6.6bil revenue last year.
The boom in the region’s gaming business is mainly due to the big tourist crowd from China.
“The relaxation of China’s travelling policy in 2002 has helped boost tourist arrivals in Macau,” Macau Tourism Board director Joao Manuel Costa Antunes told StarBiz in an earlier interview.
According to Macau Statistics Bureau, the region received 21.99 million visitors last year, up 17.6% from 2005. It said 55% of the tourists were from China.
The pie is expanding but competition is also heating up in Macau. More betting tables and slot machines are competing for the tourist dollars.
Seven new casinos were opened last year, bringing the total to 24, and the number of gaming tables doubled to 2,762 during the same period, according to Macau Gaming Inspection and Coordination Bureau.
In fact, The Standard, Hong Kong’s English language newspaper, quoted Ho as saying last August that one-third of his casinos’ VIP gaming halls faced “bankruptcy and thousands of jobs are at risk due to cutthroat competition”.
Source : STAR
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