Inside Asian Gaming

inside asian gaming September 2014 12 plateaued, the returns there have no doubt comfortably exceeded Genting’s initial expectations, and Resorts World Sentosa, which Genting controls through a majority stake in Singapore-listed Genting Singapore, has superseded Resorts World Genting as the group’s flagship, booking the equivalent of US$517 million in adjusted EBITDA in the first half against the Malaysia operation’s $298 million. The outsized returns from Singapore have inspired an aggressive plan of international expansion under the aegis of Malaysia-listed parent Genting Berhad, which can bring to bear cash reserves equivalent at the end of 2013 to US$5.6 billion and whose leverage at 21% net gearing is more than comfortable for a company whose cash flow from operations—derived mainly from its three independently traded resort operators, Genting Singapore, Genting Malaysia and Genting Hong Kong—exceeded $1.4 billion last year. Berhad’s A-minus credit standing is the best among Fitch-rated global gaming companies, and Fitch says it doesn’t expect that to change when net debt levels start to rise—and they inevitably will as the company pushes boldly into the US. The most ambitious of its plans is on the Las Vegas Strip, where the group is developing under the Berhad umbrella a US$4 billion destination called Resorts World Las Vegas. Scheduled to open in 2017, it will feature 3,000 hotel rooms, a rooftop sky park and an observation deck and water rides and is conceived from the ground up with the Strip’s increasingly influential Chinese market in mind. Genting has a further $6 billion in proposed gaming investments in the US, including a megaresort proposed for Miami and bids on two resorts in Orange County, NY, targeting the massive New York City market. Under Genting Malaysia, which trades separately in Kuala Lumpur, the company already operates the most successful machine gaming operation in the US at Resorts World New York City, opened in 2011 at a cost of $800 million. It also has a small casino (10,00 square feet) at Resorts World Bimini in the Bahamas about 50 miles from Miami, opened last summer as part of a joint venture and which is being expanded with a hotel and docking facilities for cruise ships. Following the 2006 takeover of British operator Stanley Leisure, Genting Malaysia created Genting Casinos UK, the country’s largest operator with 41 casinos and a 42nd under development in Birmingham that will be the UK’s largest. In the Philippines, Travellers International Hotel Group, a partnership between Genting Hong Kong and Philippine property giant Alliance Global Group, is spending US$650 million on a phased expansion of its Resorts World Manila—the country’s highest-grossing casino—to be completed by 2017. Travellers also is licensed to build the fourth and final IR at Manila’s Entertainment City about five miles to the west on Manila Bay, though the company is focused on RWM for the time being. In Australia, Genting Hong Kong is waiting for New South Wales regulators to approve its 2012 application to increase its 6.6% holding in Echo Entertainment to more than 10%. Meanwhile, the groundbreaking for Genting Singapore’s planned mixed-use resort with a casino on South Korea’s resort island of Jeju, a joint venture with Chinese property developer Landing International Development, has been postponed by the island’s new governor whose administration is toughening its stance on growing Chinese investments on Jeju because of fears of speculation. Genting is also eyeing opportunities from Japan to Sri Lanka, and a 3 billion ringgit (US$943 million) revamp and expansion is in the works in and around its Malaysia casino. Sixty-three-year-old Lim Kok Thay inherited control of the Genting conglomerate from his father, Lim Goh Tong, who founded it. He joined the company—whose far-flung holdings also include palm oil production, utilities, oil and gas exploration and non-gaming hospitality—in 1976. He has been a director since 1986. He became chairman in 1993 and executive chairman in 2005. The Lim family is ranked third on Forbes ’ list of Malaysia’s richest, with an estimated net worth of US$6.5 billion. Lawrence Ho Co-Chairman and CEO Melco Crown Entertainment Chairman and CEO Melco International Development By Forbes’ count there are 1,645 billionaires in the world. Only 32 of them are under 40 years old. Lawrence Ho is one. Of course, there are distinct advantages if likeMr Ho you entered the world the eldest son of a billionaire. But those do come trailing a train of expectations, all the weightier when dad is a living legend besides. Perhaps it’s what drove Lawrence Ho and James Packer to partner up in the first place. Both had big shadows to step out from. Macau provided them an opportunity. With Melco Crown Entertainment they’ve made the most of it. The opening later this year of the first phase of the US$1.5 billion City of Dreams Manila will be their joint venture’s first foray beyond the Chinese casino enclave. It’s only the beginning for them. Their fathers never envisioned anything like the global expansion they’re pursuing with determination, together and separately. Melco Crown, in which they hold equal stakes of 33.5%—Mr Ho through his Melco Leisure and Entertainment conglomerate, Mr Packer through a subsidiary of his Melbourne-based, PSX-listed Crown Resorts—generated US$1.38 billion in EBITDA last year on $5.1 billion in net revenue, a 24.7% increase over 2012. The company will be challenged to beat that top line this year in a market that’s reeling from a slump in VIP play and slowing mass-market growth. MCE’s revenue fell 7% in the second quarter, the toughest 12 weeks for Macau’s six operators in a while. Still, the company came through the first half with aggregate year-on-year gains across all its gaming and non-gaming segments and was on a pace to surpass last year’s EBITDA total of $1.28 billion. As of 30th June, the company was sitting on cash and cash equivalents totaling $2.34 billion.