Gambling Heiress Bets on Macaus Recovery - Thursday 26th of February 2009

At a time when Macau faces an uncertain hand, Pansy Ho is placing bets on the Chinese gambling enclaves future.

Ms. Ho, the 45-year-old daughter of Macau gambling magnate Stanley Ho, and her family face a difficult environment. The global recession is eating into demand from well-todo gamblers that casino operators depend on. Meanwhile, officials in mainland China have restricted the ability of some Chinese nationals to visit the city. The combination has led to drops in monthly gross gambling revenue for the first time in years -- in December, it fell 5.7% from a year earlier to 7.75 billion Macau patacas, or roughly US$970 million.

Longer-term, the Ho family is contending with rising competition from U.S.-based casino operators. Mr. Ho held a monopoly on the special administrative region of China until 2002, but his casinos have steadily lost market share to well-funded rivals with newer casinos.

Within that environment, Ms. Ho is making long-range plans to expand the family business and her own reach. As managing director of Shun Tak Holdings Ltd., a real-estate and transportation company controlled by the Ho family, she recently struck a preliminary agreement with a Dubai partner to build a new hotel in Macaus once-booming Cotai area.

Separately from Shun Tak, her joint venture with U.S. casino operator MGM Mirage remains in talks with Macau officials about building a second casino in Cotai, a spokeswoman for the venture said.

Long-term development could position Ms. Ho for a time when Macau bounces back and mainland officials relent on tourist restrictions, though analysts caution that the heady growth rates of earlier in the decade are probably a thing of the past. "As the economy recovers and as Macau becomes more ready in terms of infrastructure, [casino operators] will be in a position to welcome high levels of gaming revenue," said Gavin Ho, of CLSA Asia-Pacific Markets.

Before her emergence as a serious player in the Macau gambling scene, the U.S.-educated Ms. Ho was known primarily as the founder of a local public-relations firm and as a fixture of the society pages of Hong Kong newspapers. Her interests in Macau led to her selection as one of The Wall Street Journal Asias Women to Watch. Through representatives at Shun Tak and the MGM Mirage joint venture, she declined to comment.

Ms. Ho and Shun Tak face an early test in the One Central project, a Macau luxury-property joint venture with real-estate company Hongkong Land Holdings Ltd. set for completion by early next year. While the vast majority of units have been presold, many were to investors who have hit tough times.

Analysts say a capital infusion from another arm of the Ho empire may help should defaults materialize. Shun Tak received roughly 700 million Hong Kong dollars, or about US$90 million, in proceeds from the sale of its 50% stake in the Mandarin Oriental Macau hotel to Mr. Hos Sociedade de Turismo e Diversoes de Macau SA vehicle, a deal that valued the whole property at HK$1.6 billion. Shun Taks shares jumped 24% after the deal was announced, and analysts said the deal provided a cushion in the event of defaults. Still, at Tuesdays close of HK$2.80 (36 U.S. cents) in Hong Kong they still remain well below their price of about HK$10 a share a year ago.

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