IEC shines amid speculation it could become Macau star

Published in: Latest Intelligence International Entertainment Corp (1009.HK), controlled by Hong Kong business tycoon Henry Cheng Kar-shun, defied overall weakness in the gaming sector to gain 23 percent this week amid speculation the businessman could benefit once Macau’s current gambling licenses expire in 2020.
IEC's gains were the biggest among the Asia-listed casino stocks on our radar this week.
Hong Kong media reports, citing "authoritative sources printed that "the six existing gaming licenses in Macau may be renewed every five years, instead of the current 20 years initiating a downwards spiral of the stocks. The central government will also take the Sino-US relationship into consideration when renewing licenses, the reports said. (AGB gives absolutely no credit to the reports and questions the "authority" of the sources quoted).
Most major gambling stocks fell on the news on concern a five-year renewal rate would make it hard to justify some of the major long-term investments being made in Macau.
 Though shares in IEC, which have jumped more than 680 per cent in the past six months, rose to close at HK$7.76 on Wednesday, in the middle of their 52-week range of $0.95 - $11.30.
Market participants said Cheng, an independent non-executive director of SJM Holdings, has both the financial war chest and relevant business connections to be a key contender, as well as a strong track record of making deals in different industries.
However, equity traders said the gain came amid low volume, with the number of shares changing hands dropping by more than 50 percent, compared with the monthly average. The move was largely speculative given the long-term time horizon and gains could swiftly be reversed.
With earnings reports still emerging, results proved to be among the biggest drivers of some of Asia’s other gambling stocks this week.
Sun International, which changed its ticker to 8376.HK from 8029.HK on Feb. 14, plunged by 27 percent to finish Wednesday at HK$0.65, after posting a significant loss in the nine months ended December on a sharp rise in administrative and financing costs.
The firm, part of junket operator Sun City Group, posted a net loss of HK$63.7 million widening from HK22 million in the same period a year earlier.
Meanwhile, casino-hotel operator Macau Legend Development (1680.HK), which owns the Fisherman’s Wharf, Landmark Macau and Pharaoh’s Palace casinos, dropped more than 10 percent after its earnings disappointed.
The company said net profit fell 4.7 percent to HK$509.8 million last year, hit by the acquisition of MFW Investment and one-off costs associated with its listing in May of last year. The company's share price has risen more than 170 per cent since listing, even though it has come under selling pressure this year.
It was a different story for Naga Corp. (3918.HK), which gained some 7.4 percent after reporting a 24 percent increase in net income to US$140.3million of last year. The company is investing about US$350 million to develop a casino in Russia and operates Nagaworld in Cambodia.
Despite more upbeat estimates from analysts about a pick up in February gaming revenue, shares in the big six concessionaires failed to rally, despite a higher market overall.
Analysts at Citi forecast that Macau’s gross gaming revenue for the first nine days of Feb. reached 13.6 billion patacas, taking the full Feburary figure to an increase of 29 percent from the period a year earlier. Nomura sees February’s gaming revenue up between 27 percent and 30 percent.
Shares in Stanley Ho’s SJM Holdings (880.HK) dropped more than 4 percent over the week, the biggest weekly decline among the major six in Macau, after Asia’s biggest casino operator increased its budget to build its first project on Cotai by HK$5 billion to HK$30. Melco Crown Entertainment (6883.HK), controlled by Lawrence Ho and James Packer, slipped 0.2 percent, the best performer among the majors.
Melco's relatively sound performance was supported by investors' confidence in its diversified portfolio, which includes a presence in Macau and the Philippines, as well as ambitions for Japan.
The company, which reported results in line with expectations, said it had enough cash flow to fund its expansion in the Philippines and Macau and announced a maiden dividend to shareholders.
UBS said Melco's move to adopt a formal dividend policy was an important milestone for the company, even though it did little to rally the stock this week.
Moving over to the Philippines, Philweb Corp (WEB PH), a gaming company led by former Trade Minister Roberto V. Ongpin, dropped more than 12 percent to 7.31 pesos, slightly above its 52-week low of 7.3 pesos.

Bet365 awaits AUSTRAC investigation, results up for 23/24 financial year
_2025-01-07Paradise Ent. and Tangiamo sign global distribution agreements
_2025-01-07Most content removal requests target online gambling: Malaysia comms authority
_2025-01-07Clark International Airport welcomes 2.4M passengers in 2024, mostly international
_2025-01-07Nearly 60 workers fight their way out of sanctioned Cambodian casino complex
_2025-01-07Record $17.7 million Mark Six jackpot in Hong Kong split by two winners
_2025-01-07

Open in new window
View settings