Inside Asian Gaming

INSIDE ASIAN GAMING | September 2009 30 37 (40) Sonny Yeung Hoi Sing Chairman, Success Universe Group Ltd and the United States. Mr Yeung’s formative gaming industry experience was as a VIP room operator at Dr Stanley Ho’s Casino Lisboa. The relationship forged during that time paid dividends when he was able to broker the investment deal with Dr Ho for Ponte 16, where the gaming rooms also operate under an SJM licence. Ponte 16 is the only gaming resort currently operating next door to Macau’s old town, which is a UNESCO-listed World Heritage site. A ferry terminal at Macau’s Inner Harbour next to Ponte 16 provides visitors fromZhuhai on theChineseMainland easy access to the resort via a five-minute ferry ride. Ponte 16 is a predominantly mass- market facility. As at 31st December 2008, the casino had 97 gaming tables, only eight of whichwere high-roller tables, plus 278 slot On the mass side, NagaWorld’s slot machines increased aggregate handle by more than 1,000%. The huge improvement in slot performance coincides with the revenue share agreement made between NagaCorp and Elixir Gaming Technologies (EGT) in January. This allows the latter to manage NagaWorld’s slots on a revenue share basis with win per unit per day split 80:20 in favour of NagaCorp, according to a filing with the US Securities and Exchange Commission made by EGT. In the VIP table sector, however, NagaWorld’s revenues in the six months to the end of June fell 66.8% to US$34.1 million from US$102.8 million in the equivalent period last year, said the Hong Kong-listed parent company. This was despite the fact that the number of VIP players remained more or less stable. In the first half of 2008, high roller play accounted for 94.2% of gross gaming revenue at NagaWorld. That was stimulated by the resort’s positioning as a mid- market facility with modest check-in limits of around US$25,000 to US$30,000 per customer, in a region with a shortage of quality high roller casinos. First-half after-tax profits at NagaCorp fell to US$11.5 million in the six months to the end of June, down from US$25.5 million last year. The results suggest that secondary Asian gaming markets are even more vulnerable to contraction during general recession than are core ones. This may be the case despite the fact NagaCorp has strong political support from Hun Sen and a 70-year monopoly licence within a 200-kilometre radius of Phnom Penh lasting until 2065. In terms of yield on total capital invested, however, NagaCorp’s business model for NagaWorld has remained resilient, given the relatively modest cost of redeveloping the site. At most recent estimates that was little more than US$100 million, paid for out of cash generated by the business rather than via costly commercial loans or bonds. Indeed, in the first half of 2009, NagaCorp announced a share buy back equivalent to 10% of the company’s aggregate nominal capital. 38 (43) Chen Lip Keong Founder and CEO, NagaCorp Chen Lip Keong’s three decades-plus of experience in business management will be invaluable in navigating Hong Kong-listed NagaCorp, the operator of the Cambodian casino resort NagaWorld, through the generally choppy waters faced by all gaming companies in Asia and beyond. Dr Chen is an official advisor to Hun Sen, the prime minister of Cambodia, and is credited with helping to revitalise the country’s tourism industry following two decades of civil war. NagaCorp’s first-half performance in 2009 has been a tale of two markets. Success Universe Group Ltd (formerly Macau Success) is a joint venture investor with Dr Stanley Ho’s SJM Holdings in Ponte 16, a gaming resort that opened in February 2008 at Macau’s historic Inner Harbour. The company also runs a casino cruise ship, the M.V. Macau Success, out of Tsim Sha Tsui in Hong Kong. In June, Macau Success announced it had changed its name to Success Universe Group Ltd. The Hong Kong-listed business said this was to reflect the international expansion of its business into North America, where it operates Jade Travel Group, an air ticket consolidator serving customers in Canada machines. In 2008, the then Macau Success recorded an operating loss of HK$170.3 million (US$21.9 million) on its share of the Ponte 16 venture. 36 (23) Albert Yeung Founder and Chairman, Emperor Group Albert Yeung is well known in Macau and beyond as the businessman who built the‘casino paved with gold’. The lobby of the Grand Emperor Hotel & Casino in downtown Macau features a ‘Golden Pathway,’ with 78 gold bars, each weighing one kilogram, recessed in the floor under glass panels. The gesture aptly sums up Mr Yeung’s personality as a showman and showbusiness entrepreneur. He counts Hong Kong and Hollywood actor Jackie Chan among his friends, with Mr Chan named as a minority shareholder in the Grand Emperor Hotel & Casino when it opened in January 2006. Mr Yeung was also one of the minority financial backers of the controversial Oliver Stone film ‘W’ about the life of former President George W. Bush, released last year. Mr Yeung’s official biography recounts that he started in business as a jewellery retailer with one shop selling jewellery and watches. From that foundation, he expanded into property development and investment, financial services, entertainment and movies, hotels, publishing, catering and general retailing. The Emperor Group, based in Hong Kong, has become a regional player in entertainment and leisure, with ventures in Macau, China, Taiwan, Thailand and Indonesia, employing some 7,000 staff.