Macau’s gaming market has “stabilised”, said Lui Che Woo (pictured), chairman and founder of casino firm Galaxy Entertainment Group Ltd.
“I think the situation there [Macau] has already calmed down. It has stabilised. I am optimistic that in one year or two years, it will improve,” stated Mr Lui in an interview with U.K. public broadcaster the BBC.
Macau’s mass gaming revenue is likely to grow by approximately 4 percent quarter-on-quarter in the third quarter, “marking the first sequential increase since the first quarter 2014,” said UBS Securities Asia Ltd in a report issued on Monday.
The city has seen 15 consecutive months of year-on-year decline gaming revenue, with the industry weighed down by China’s anti-graft drive and a slowing of the Chinese economy. Factory activity in China fell to its lowest level in six-and-a-half years in September, according to a preliminary private sector survey announced on Wednesday.
In the first half of this year the Chinese economy expanded by 7 percent but most economic indicators in the first two months of the third quarter showed weaker economic performance, official news agency Xinhua reported last week.
Mr Lui said a slowing in the Chinese economy would allow the nation to move in a “new direction”. China’s Premier, Li Keqiang, this week called for the country’s manufacturers to focus on “innovation”.
Galaxy Entertainment’s Mr Lui said in his interview: “The economic slowdown is a good thing. Over the past decade or so, [China’s] expansion has been extremely fast, so it has to slow.”
He added: “At the moment the Chinese economy is turning a corner. It is changing direction. You can’t be accelerating at the same time. They have to figure out a new direction. If they succeed, the future would be incredible.”
Mr Lui was asked about a decline in his personal wealth linked in part with a fall in Galaxy Entertainment’s stock price since the gaming market retreat began last year.
In the 2015 Forbes’ Billionaires’ list, published in March, Mr Lui fell more than 50 places to 82nd in this year’s global list. His net worth dropped from an estimated US$22 billion last year to US$13.5 billion this year, Forbes said at the time. The online version of the list on Friday showed Mr Lui still in 82nd place and his “real time net worth” – as of Thursday – as US$7.4-billion.
“As for the impact on my personal wealth… I really don’t dwell on it. Our expansion in Macau will continue as we had originally planned,” the Galaxy Entertainment chairman said in his remarks to the BBC.
Morgan Stanley Asia Ltd said in a note on Thursday that Galaxy Entertainment’s stock – which closed at HKD20.55 (US$2.65) per share on the Hong Kong Stock Exchange on Thursday – was currently “too cheap to ignore”. The institution advised investors to upgrade their holdings in the stock to “overweight”.
“We expect Galaxy to report above-peers EBITDA [earnings before interest, taxation, depreciation and amortisation] growth quarter-on-quarter in the third quarter,” said Morgan Stanley analysts Praveen Choudhary and Alex Poon.
Referring to competition faced by Galaxy Entertainment from a majority-owned Melco Crown Entertainment Ltd casino resort due to open on Cotai on October 27, the Morgan Stanley team added: “It [Galaxy Entertainment] should be less impacted by Studio City, and has a strong balance sheet. Current valuation of 9 percent ‘free cash flow to the firm’ yield and 9x enterprise value divided by EBITDA [estimated for 2016] should protect the downside.”
World civilisation prize
On Thursday, Mr Lui announced the launch of the “Lui Che Woo Prize – Prize for World Civilisation”, an international award totalling HKD60 million annually in prize money “to honour achievements which make the world a better and more sustainable place”. A total of HKD2 billion has been allocated for operation of the prize, according to Hong Kong media reports.
The prize council includes Tung Chee Hwa, the first chief executive of Hong Kong following the city’s return to Chinese administration in 1997, and Condoleezza Rice, former U.S. Secretary of State.
There will be three prizes granted each year, with the prize topics changing annually. The first three prizes, to be granted in 2016, will cover: ‘World food supply: safety and security’; ‘Treatment and/or control of epidemics, infectious diseases or chronic illnesses’; and ‘Individuals or organisations whose behaviour and achievement inspire, energise and give hope to others’.
More than 1,000 universities, academic institutions and professional organisations will be invited to submit nominations, according to a press release. Each prize awardee will be selected by a three-tier judging system, comprising the prize council, the prize recommendation committee and the selection panels of the three categories.
The list of nominees will be compiled by a recommendation committee, which also includes prominent members such as Nobel literature prize laureate Mo Yan.
In July last year, Galaxy Entertainment announced the setting up of a charitable foundation with an initial HKD300 million endowment. The company will allocate HKD100 million to the foundation each year for the next 10 years, amounting to HKD1.3 billion.
The foundation aims to support young people in “positive endeavours” including entrepreneurship, Galaxy Entertainment said at the time.
Apr 26, 2018
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