Aug. 1 (Bloomberg) -- Shun Tak Holdings Ltd., the company founded by gambling billionaire Stanley Ho, is planning to build a hotel-to-office complex on an island next to Macau. Share rose by most in eight months.
The Hong Kong-based company won a bid for a site in Hengqin for 721 million yuan ($118 million), according to a statement to the Hong Kong stock exchange. The site will be developed into an office, hotel, service apartment and commercial project, according to the statement.
China designated Hengqin as a tourism, business and cultural zone, and a resort is under construction in the area, Shun Tak said. SJM Holdings Ltd., the casino company founded by Stanley Ho, received final approval in May to build build a casino resort in Macau’s Cotai area.
“We believe this deal could be a huge positive catalyst for Shun Tak, as it will ride along with the long-term growth story of Hengqin,” Anil Daswani, an analyst at Citigroup Inc. wrote in a research note today. He raised the target price to HK$5.50 from HK$5.10 and maintains a buy rating.
Shares of the company gained as much as 9.6 percent in Hong Kong, the biggest intraday climb since Nov. 27, 2012, as of 11:07 a.m. local time. The stock is the fourth biggest gainer on the Hang Seng Composite Index.
The site will have direct access to port and commercial facilities at the border between Hengqin and Macau and will be located at a planned transportation hub, the company said. Site works are expected to begin late this year, according to the statement.
“The location and strategic value of this Hengqin project naturally complement our existing hospitality business in Macau,” Pansy Ho, managing director of Shun Tak, said in a separate statement.
Macau’s long-term growth is restrained by limited land resources and lack of entertainment and convention venues, analyst Daswani wrote in an earlier report in May. Hengqin, which is three-times the size of Macau, could help eliminate the obstacles faced by the gambling hub.
Galaxy Entertainment Group Ltd. have also expressed interest in pursuing a non-gambling project in the area.
To contact the reporter on this story: Simon Lee in Hong Kong at firstname.lastname@example.org
To contact the editor responsible for this story: Hwee Ann Tan at email@example.com