Inside Asian Gaming

36 craft, with plans to build the fleet up to more than 10 aircraft within two years, flying to 20 destinations in Asia. STH also has an indirect interest in Air Macau, the territory’s flag carrier airline, through STH’s stake in STDM. Macau recorded a 19% increase in air arrivals and departures in 2006 compared with the previous year. Infrastructure links STH’s links toMacau’s infrastructure go deep,thanks to its connec- tions to the business empire of Dr Stanley Ho,Macau’s former gaming monopolist. Dr Ho is no longer Shun Tak’s chairman, but still sits as an executive director on the board, as does Dr Ambrose So, widely regarded as Dr Ho’s right-hand man at SJM. Dr Ho’s daughter Pansy Ho is Shun Tak’s managing director. She has built a reputation as an astute businesswoman in her own right, and in a personal capacity is also a 50-50 partner with MGM Mirage on the MGM Grand Macau casino resort due to open on the penin- sula in the fourth quarter of this year. Morgan Stanley says: “We believe Shun Tak will be a key benefi- ciary to the heavy infrastructure investments deployed by the Macau Government given its leverage to the overall economy. We have in- creased our valuation for Harbour Mile and One Central’s retail por- tions to HK$6,000 and HK$12,000/ sq. ft respectively considering the rents of HK$55-60/sq. ft being achieved on relatively more oversup- plied Cotai. Two further catalysts are the conclusion of the Cotai site acquisition and the potential SJM listing, which could add another HK$1-2/share.” JP Morgan adds:“We continue to view Shun Tak as the “blue chip” diversified Macau play, and we believe the opening of The Venetian, Shun Tak’s announcement of its Cotai casino project, and the pre- sales of the Nam Van project at the end of this year should be the main drivers for the stock.” Shun Tak Holdings Ltd, founded in 1972 and listed on the Hong Kong Stock Exchange since 1973, has four core businesses: » Shipping. An approximate 80% share of the HK-Macau ferry market. It has diversified into inter-city ferry services to Shenzhen and Guangzhou » Hospitality. Owns 50% of Mandarin Oriental Macau and 34.9% of Westin Resort Macau » Gaming. Owns 11.5% of STDM. STDM subsidiary SJM is the dominant gaming licence holder in Macau » Property. A development ‘landbank’ of 8 million sq.ft in Macau, HK$2.5bn of investment properties, and a 10m sq. ft gross floor area property management portfolio in Hong Kong and Macau. Source: DSEC, Morgan Stanley Research Macau Air Arrivals and Departures, 2006 Visitors 2,451,280 49% Transit 2,254,348 45% Residents 270,465 5% Total 4,976,093 100% Macau Visitors and Growth by Air Source: DSEC, Morgan Stanley Research 1.4 1.2 1.0 0.8 0.6 0.4 0.2 - 45% 30% 15% 0% -15% -30% -45% Visitor (mil lions ) 2000 2001 2002 2003 2004 2005 2006 2007 YTD Airport Heliport Growth The Four Pillars