Macau casino operator Galaxy Entertainment Group Ltd is interested in bidding for a gaming business in Japan, even as it prepares to expand its Macau operations, says company founder and chairman Lui Che Woo (pictured).
Mr Lui stated on Tuesday that the casino firm is looking for business opportunities in Japan. He added that the company would in likelihood join forces with local partners if it eventually bids for a casino licence in that country. The executive was speaking during the announcement of Galaxy Entertainment’s 2016 earnings results.
Legislation making casino gambling legal in Japan came officially into effect on December 26. But casino legalisation in Japan is a two-statute process. After approval of the enabling bill legalising casino resorts at the conceptual level, a second piece of legislation has now to be passed, detailing the specifics with respect to licensing, investment, location and taxation.
On Tuesday, Mr Lui said he was optimistic that the remaining Japan casino legislation would move forward, and noted that Galaxy Entertainment already had an office in Tokyo.
The executive highlighted the business relationships that his family’s Hong Kong-based building materials firm K. Wah Group Ltd already has with Japanese companies. Galaxy Entertainment was originally spun off from K. Wah Group, a company founded by Mr Lui in 1955.
“We have a relationship with Japan’s industrial players for over 50 years…we will seek cooperation opportunities and [to] do a big project [in Japan],” Mr Lui was quoted as saying on Tuesday by the South China Morning Post newspaper.
Several investment analysts covering the gaming sector have suggested that foreign casino operators will have to find local partners in order to be able to bid for a casino licence in Japan.
Brokerage Sanford C. Bernstein Ltd however said it “remains too early to provide any value for a Japan option [for Galaxy Entertainment] at this stage”.
“While Galaxy may be a strong operator in Macau, it will face very strong competition from other more global competitors and a Chinese, Macau-only, operator may not be a top choice for Japan,” said analysts Vitaly Umansky, Zhen Gong and Yang Xie in a Tuesday note.
Most major global casino operators have expressed an interest in developing an integrated resort – including a casino – in Japan. The list of potential suitors includes Las Vegas Sands Corp, MGM Resorts International, Genting Singapore Plc and Melco Crown Entertainment Ltd.
Galaxy Entertainment on Tuesday posted annual profit of HKD6.28 billion (US$809.1 million) for 2016, up 51 percent from the prior year. The company said that same day it expected to commence construction for Phase 3 and Phase 4 of Galaxy Macau, in Macau’s Cotai district “in late first quarter or early second quarter of 2017”.
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"VIP growth [in Macau] is roaring back on the heels of last year’s economic stimulus – but we think this could stall once the effect of the stimulus and the Chinese housing bubble wears off – as it did in 2013-14"
Cameron McKnight and Robert Shore
Analysts at Wells Fargo Securities