Casino Billionaire Ho Transfers Holding in SJM's Parent to Family Members
Stock Chart for SJM Holdings Ltd (880)
Billionaire Stanley Ho gave most of his stake in the parent of SJM Holdings Ltd. to family members, accelerating the handover of his Macau casino empire 10 months after the 89-year-old chairman left the hospital.
Ho gave up a 31.7 percent stake in Sociedade de Turismo e Diversoes de Macau to two companies owned by members of his family, according to a statement from SJM, Asia’s largest casino operator. He “no longer has an attributable interest” in STDM, as the parent is known, the statement said.
SJM fell the most in a month in Hong Kong trading on concern the ownership transfer may affect decision making. Ho, who held a gambling monopoly in Macau for four decades until 2004, was released from hospital in March after seven months and two operations.
“He’s been the real strength,” Andrew Sullivan, director of institutional sales at OSK Securities Hong Kong Ltd., said by phone today. “Now, instead of dealing with Stanley, you may deal with a lot more people. It introduces a huge element of uncertainty in what is already a cut-throat business.”
SJM fell 4 percent to HK$13.80 at the 4 p.m. close of trading in Hong Kong. It earlier slid as much as 8.9 percent. The stock has more than tripled in the past year.
The 31.7 percent stake in STDM will be held by Lanceford Co., according to the statement. Action Winner Holdings Ltd. will hold a 50.55 percent stake in Lanceford and Ranillo Investment Ltd. will have 49.45 percent.
Action Winner is owned by Ho’s third wife Chan Un-chan and Ranillo Investment is owned by Ho’s children Pansy, Daisy, Maisy, Josie and Lawrence, according to a statement from Brunswick Group LLP, the public relations company for Lanceford.
“Stanley Ho is getting old,” Victor Yip, Hong Kong-based analyst at UOB-Kay Hian Ltd., said by phone. “Today’s action is part of his plan to distribute his wealth to family members. SJM’s daily operations are already handled by Ho’s competent assistants.”
Ho now holds 100 shares of STDM, according to SJM’s statement to the Hong Kong’s stock exchange. SJM holds the biggest market share in Macau, the world’s biggest gambling hub, and is 56 percent owned by STDM, according to data compiled by Bloomberg.
“Stanley Ho’s effective stake in SJM is lowered to less than 2 percent,” Karen Tang, a Hong Kong-based analyst for Deutsche Bank AG, said in a note to clients today. “While this may create near-term uncertainty, we think this is long-term positive as it further lowers succession risks.”
“There will be no change in management or strategic direction” after the transfer, SJM said in its statement.
SJM has a market share of 32.6 percent in the former Portuguese colony, the only place in China where casinos are legal, according to a Jan. 17 research note from CLSA Ltd. analysts Aaron Fischer and Huei Suen Ng. Sands China Ltd. has 16.5 percent followed by Wynn Macau Ltd. with 15 percent and Galaxy Entertainment Group Ltd. with 12.6 percent.
Melco Crown Entertainment Ltd. a joint venture between Lawrence Ho’s company and Australian billionaire James Packer’s Crown Ltd., has a market share of 11.7 percent, while MGM Resorts International’s venture with Pansy Ho had 11.6 percent, the CLSA analysts estimated.
Macau Casino Revenue
Casino revenue in Macau may climb 30 percent to $30 billion this year as visitors from mainland China increase, Fischer and Ng forecast in their note.
Gambling revenue for the city’s six casino operators rose 58 percent to 188.3 billion patacas ($23.5 billion) last year, according to government data. Last year’s increase of $8.6 billion is 50 percent more than the total gambling revenue for the Las Vegas Strip for all of 2010, according to data compiled by Bloomberg.
Ho last month transferred his 7.7 percent stake in SJM to companion Angela Leong, mother of his five youngest children. Shun Tak Holdings Ltd., a property developer that also operates ferries between Hong Kong and Macau, on Dec. 2 said Ho cut his direct ownership in the company in favor of two holding companies in which his children have stakes.
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