Hong Kong
12 August 2013 Sector Report
Macau Hengqin Roadshow Positive Takeaways on Hengqin Outlook
Hengqin rocks! On Friday, we took over 20 fund managers to Hengqin, Gaming Zhuhai and Macau to better understand the various development plans and property projects in the southern Guangdong region. Participants Jeremy TAN had the opportunity speak to officials from the Hengqin Planning [email protected] Commission to learn about government’s latest reform. (852) 2268 0635 Consensus overweight underscored by infrastructure surge. We
visited Sands’ Venetian and SJM’s Grand Lisboa, arguably the two Property most iconic completed properties in Macau amongst tourists; the two Karen P KWAN operators are also the largest in terms of 1H GGR market share at 21% [email protected] and 25%. We were also privileged to have senior management from (852) 2268 0640 Neptune, a junket investor, join us in the evening. Management from each company shared with us in detail their individual strategies for Philip TSE, CFA FRM future growth and addressed our queries of their operations. In [email protected] summary, the gaming sector appears to be a consensus overweight (852) 2268 0643 amongst both analysts and fund managers alike, with a plethora of both
non-gaming and gaming infrastructure to come on-stream in the next five years. Key questions from the fund managers to the casino operators included: 1) the impact of credit conditions on VIP business; 2) expected capex, table supply and margin outlook; 3) growth strategies
amid competition. Our top gaming pick remains Sands.
Hengqin – rising land costs and Huarong project Sea of Dreams to set an initial benchmark but local sales from the Huarong project would not pinpoint on a launch price yet. Recent land transactions in Hengqin including by the entity Keshanghui at an AV of above CNY15k/sqm for a residential parcel in Shizimen indicate that land costs are going up. Hengqin Island is not under home purchase restrictions, and Zhuhai’s HPR applies to the central area, Xiangzhou. We believe land costs would stay elevated in Hengqin given the low tax rate for qualified industries, support from the Zhuhai and central government as well as improving infrastructure. Listed developers with confirmed land parcels in Hengqin include Shun Tak and COLI, while there were media reports that Lai Sun and Shimao/Shanghai Shimao signed agreements for investments on the island but have not added Hengqing land to their official landbanks. Zhuhai – we also visited Yanlord’s Marina Center in the Xiangzhou district (close to the border). Though it is in a prime location, we expect sales to be slow given large lump sum of each unit (minimum of close to CNY9m per fitted unit) and high ASPs of ~CNY43k/sq m targeting buyers from Macau and Zhuhai. Only ~20 out of 97 units to be launched were reserved.
When the port facilities between Hengqin If the city’s overall ASP of a particular We continue to excel and innovate in the and Macau get fully ramped up and the month is still within government’s mass-market segment, where other HK-Zhuhai-Macau bridge becomes more tolerance range, some units should still operators have chosen not to focus in the mature, we believe there could be over allowed to transact even though Marina past. Setbacks that hit the VIP side, 10 m visitors a year handled by the port. Center post-discount ASP of ~CNY43k almost never touches the mass side, /sqm tops Zhuhai high-rise apt and far which has been growing resiliently at “Rep from Hengqin Planning exceeds the price control target. about 30% the last quarters. Commission” “Local Zhuhai Sales, Yanlord” “Director of IR, Sands China”
SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Macau Hengqin Roadshow
Hengqin Island – a new Special Economic Zone. Adjacent to Macau, Hengqin Island (Hengqin) was once an undeveloped island at the south of Guangdong province. Along with Nansha and Qianhai, Hengqin has been designated a Special Economic Zone under the China’s 12th five-year plan. Other special economic zones, such as Tianjin’s Binhai, have experienced rapid economic growth since it was targeted for development in the China’s 11th five-year plan. Hengqin spans 106.5sq km and is more than three times the size of Macau. There is also established infrastructure within 100km of Hengqin, including five international airports, four deep harbours, eight highways and three major railway lines.
Seven industries of focus. The government has specified that Hengqin will be focused on the following seven industries: 1) leisure & tourism, 2) business services, 3) financial services, 4) cultural innovation, 5) research, 6) hi-tech industry and 7) healthcare. Hengqin sits in close proximity to Macau’s exciting Cotai Strip, separated by a dedicated border checkpoint at the Lotus bridge. We believe Hengqin will be rapidly developed given support from both the Zhuhai government as well as China’s central government.
Favorable tax regime. In order to boost trade in Hengqin, the State Council has introduced a total import duty exemption on all goods on condition that the goods are not subsequently transferred to other parts of Mainland China. Furthermore, qualified companies are also charged a lower corporate tax of 15%, compared to the average China corporate tax rate of 25%.
Figure 1: Hengqin, Macau, Hong Kong Island map
Source: Maybank Kim Eng, Google Maps
Figure 2: Artist impression of Hengqin Figure 3: Artist impression of Hengqin’s various districts
Source: Hengqin Planning Commission Source: Hengqin Planning Commission
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China’s largest amusement park planned. We visited Hengqin Island Exhibition Center and, over lunch, discussed with Hengqin Planning Commission the exciting plans the government has proposed. There are currently about 56 projects planned with total investment in the whole Hengqin district estimated at about CNY226b. Hengqin is poised to be a major tourist destination and we expect it to track the growth of the Cotai strip. The first phase of the Ocean Kingdom theme park (to be operated by Chimelong group, a leading theme park operator in Guangdong) is expected to become China’s largest amusement park, will have its soft launch from 2H13. The amusement park is expected to eventually house 10 distinct themes, 12 luxury hotels and three golf courses, according to Chinese media sources. The original total investment that Chimelong plans for the project is around CNY10b, but we believe the eventual investment cost may not be so high. Furthermore, it is our understanding that there will also be a residential/serviced apartment component of Chimelong’s project that could be sold.
Figure 4: Planning model of Hengqin and Macau Figure 5: Ocean Kingdom Theme Park by Chimelong
Source: Hengqin Planning Commission, Maybank Kim Eng Source: Zhuhai News
High speed rail connects Hengqin. The current Guangzhou-Zhuhai intercity railway will be extended a further 17km to Hengqin from Gongbei. Hengqin will also be linked to the Zhuhai airport, thus reducing travel time to ~25 minutes from the current one hour. We believe that the greater accessibility in southern Guangdong province will drive tourism in Hengqin. Furthermore, the access into Macau will become seamless with the Gongbei border and Lotus Gate border linked with Macau’s light rail, which is currently under construction. The local government is also in talks to implement a 24-hour border checkpoint which will be mutually beneficial to the two administration region.
Figure 6: Guangzhou-Zhuhai Intercity and Macau LRT Figure 7: Guangzhou-Zhuhai Intercity Railway Network
Source: Hengqin Planning Commission, Maybank Kim Eng Source: Guangzhou and Zhuhai Metro Bureaus, Maybank Kim Eng
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Macau Hengqin Roadshow
Hong Kong-Zhuhai-Macau bridge narrows the gap. Work on the major Hong Kong-Zhuhai-Macau Bridge has begun and is expected to be completed by end- 2016. We believe the bridge will encourage land-based travel, particularly for stopover tourists in Hong Kong, by reducing time spent by up to 2-3 hours. This is in addition to the savings on travel cost. Furthermore, the bridge’s proximity to the Hong Kong International Airport will result in more traffic flow and economic expansion in the western Pearl River Delta region, which currently is accessed predominantly by sea-based transportation. We believe this would alleviate the current transportation bottleneck, as the ferry between Hong Kong and Macau is not operated 24 hours a day and long waiting times (sometimes between 1-2 hours) are a norm for commuters if they have not pre-purchased ferry tickets.
Figure 8: Model of Hong Kong-Zhuhai-Macau Bridge Figure 9: Model of new reclaimed checkpoint
Source: Company, Yanlord, Maybank Kim Eng Source: Company, Yanlord, Maybank Kim Eng
Figure 10: Macau visitors YTD Jun 13 by geography Figure 11: Macau visitors YTD Jun 13 by entry points
Others, Airport, Heliport, 1,416,441 , 900,829 , 20,732 , 0.1% Outer 10.0% 6.4% Other Land Harbour, Taiwan, China, Entry, 3,439,563 , 458,072 , 3.2% 739,668 , 24.3% Mainland 5.2% China, Inner Harbour, 8,906,352 , 259,888 , 63.0% 1.8% Hong Kong, 3,361,375 , Taipa 23.8% Provisional Border Gate, Harbour, 6,823,776 , 1,957,784 , 48.3% 13.8%
Source: DSEC, Maybank Kim Eng Source: DSEC, Maybank Kim Eng
Housing prices soar. As property prices soar in space-scarce Macau, so has the area in Hengqin, driven by increasing infrastructure and rising affluence. The average price of housing just four years ago was around CNY6,500/sqm, based on the price of resettlement homes for landowners who sold to developers. We understand that the government has offered several plots of land on Hengqin for tender. Shun Tak announced in late-July that it will pay CNY721m to acquire a prime land parcel in Hengqin with GFA of approximately 131,089sqm, translating to a cheap AV of CNY5,500/sqm. COLI also has a project on Hengqin, which Soufun expects will be launched in 2014. The government has set its sights on increasing Hengqin’s population from the current 7,000 residents to 280,000 by 2020, according to various local press articles. This will further fuel end-user and speculative demand for housing, in our view.
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Macau Hengqin Roadshow
Figure 12: Hengqin map
Source: Hengqin Planning Commission Huarong’s Sea of Dreams, the only new commodity residential property project we can find for sale in Hengqin in 2013. Recall that Hengqin is not under home purchase restrictions. We also visited the Huarong Sea of Dreams 华融琴海湾 by Huarong Real Estate last Friday afternoon. The project offers about 1,800 units and 2,700 car parking spaces and a wide range of product sizes from two-bedroom units of 87sqm to as large as five-bedroom units of 221sqm. According to the salesperson at the project, this is the only new residential commodity property development available for sale in the Hengqin
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Economic Zone in 2013. Although there is no precise launch schedule, the initial launch plan comprises of about five blocks of high-rise apartments (out of 21 blocks in total), targeted at buyers from Macau. However, according to Sina, Sea of Dreams is expected to fetch ASPs of CNY25,000/sqm though the local sales staff at the project refuses to disclose the expected ASPs – which leads us to believe the launch price could come in higher. Secondary market property prices for some old projects in the vicinity have an ASP of ~CNY20k/sqm and with an AV of ~CNY15,800/sqm at another recent land auction, we expect the developer to try to price the project more aggressively.
Figure 13: Master planning model of Huarong Sea of Figure 14: Exterior of Huarong Sea of Dreams (华融琴海湾 ) Dreams (华融琴海湾 )
Source: Company, Maybank Kim Eng Source: Company, Maybank Kim Eng
Shun Tak’s site in Hengqin is in a prime location with good access to commercial and port facilities. In late July, Shun Tak (242 HK, Not Rated) announced that it had acquired a 131,089sqm mixed-use project in Hengqin New Area, adjacent to Macau, through a listing-for-sale for CNY721.0m, which translates to an AV of CNY5,500/sqm. We estimate Shun Tak’s serviced apartments will fetch a GPM of over 30%. The project includes office, hotel and commercial space (all with 40 years’ land use rights) as well as serviced apartments (with 70 years’ land use rights). Management expects each category to comprise about 25% of the total GFA of the project. COLI also has a project in Hengqin close to the Huarong Sea of Dreams but the project has not yet been launched and therefore no prices have yet been released. Shun Tak management previously indicated that it intends to sell the office and serviced apartment portions of the Hengqin project but retain the hotel and rent out the retail space for recurrent income. Shun Tak plans to start construction at the end of this year and expects the project to take 4-5 years to develop. We believe that the prime location of the property – near the Lotus Bridge and Macau – makes this a good acquisition for Shun Tak from a strategic perspective.
A parcel of residential land (~87,500 sqm) was transacted at an AV of CNY15,873/sqm to the entity Keshanghui 客商匯實, a representative from the Hengqin Planning Bureau indicated. Keshanghui was set up in April of last year and consists of various enterprises/investors from Guangdong, Fujian and Taiwan, according to Sohu. The prime parcel acquired is well-located at the Shizimen Central Business District (十字門中央商務區) in Hengqin but the land costs look quite high to us. We believe land costs will stay elevated in Hengqin given a low tax rate for qualified industries, support from the Zhuhai and central governments as well as improving infrastructure.
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Figure 15: Shun Tak’s Hengqin land area Figure 16: Other Hengqin land area beside the Lotus Gate
Source: Maybank Kim Eng Source: Maybank Kim Eng
Figure 17:Prime location of Shun Tak's Hengqin acquisition
View A
View B
Source: Company data, Maybank Kim Eng
During our trip, we also visited Yanlord’s Marina Center in Zhuhai which is well-located but large outlays per unit might mean slow sales. This project is located on the prime QingLv Road South in Xiangzhou, Zhuhai. The initial launch is expected to take place as soon as the developer receives its presale permit according to local sales staff, possibly by this month. The project has a total GFA of ~216,000sqm, of which ~130,000sqm is residential and ~86,000sqm is planned for hotel, office and retail space. Intercontinental is slated to manage Yanlord’s hotel, with estimated completion by 2016. Yanlord’s land cost for this project was only CNY1,679/sqm. This site is located very close to the Gongbei- Macau border and Xiangzhou is under home purchase restrictions in Zhuhai; we
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Macau Hengqin Roadshow
expect sales to be slow given the large outlay required for each unit (minimum of close to CNY9m per fitted unit). The initial launch is expected to come from Block 1 with unit sizes of ~215, 301, and 466 sqm. We visited unit A show flat which has an unblocked view of the water (though the water color was not blue). Yanlord’s sales indicate an ASP of CNY43k/sqm (post discounts) and we were very impressed by the quality of the show flats on site. We believe most of the buyers would be from Macau and Zhuhai. The sales manager indicated that Yanlord expects to launch 97 units and so far ~20 units have been reserved. Because the pricing on this project is ~CNY43,000/sq m, contract signing might be slow as the Zhuhai land bureau is unlikely to allow many units at this price point to be signed.
Figure 18: Development model of Yanlord’s Marina Center Figure 19: Showflat of Marina Center
Source: Company, Maybank Kim Eng Source: Company, Maybank Kim Eng
Figure 20: View from a showflat of Marina Center
Source: Company, Maybank Kim Eng
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Overall Zhuhai Market
Apart from the policies adopted nationwide such as differential mortgages, Zhuhai was one of the very first cities to have both a home purchase restriction (HPR) and price cap for pre-sale permit approvals. On 31 Oct 2011, the Zhuhai Government published the “Notice regarding in-depth regulation of the real estate market” (“關於深入開展房地產市場調控工作的通知”). HPR and price cap measures, effective 1 Nov 2011, are two major administrative measures over the property market mentioned in the Notice though the price cap was only effectively implemented for a few months and not really strictly enforced currently. The current policy environment in Zhuhai does not look tough to us.
HPR: From 1 Nov 2011, non-local residents with proof of one full year’s payment of social security fund or income tax, as well as local residents, can only purchase one new commodity residential property unit within the city center area of Xiangzhou District of Zhuhai. No new purchase was allowed in the city center area of Xiangzhou District for non-local residents without the required tax or social security fund payment proof. In the past, non-local residents were able to backdate one full year of social security fund or income tax payments; however, property agents have indicated to us that backdating is no longer accepted, and they have recently seen interested potential buyers starting to pay into the social security fund to gain eligibility to buy and contract a unit a year down the road.
Price caps: From 1 Nov 2011, developers have been required to file the intended pre-sale price and obtain the consent of filing from the Bureau of Commodity Prices in order to apply for the pre-sale permit. The price cap for Zhuhai city price control target for 2011 was CNY11,285/sqm. We saw some implementation of the price cap for several months following Nov 2011, but afterwards it was not strictly adhered to; we have seen transacted ASPs of over CNY20k/sqm during both last year and this year. Our channel checks show some developers split part of the property transaction amount into a separate furnishing contract. Zhuhai’s property prices edged up in 1H13 after relatively flattish prices in 2012.
HPR not applied to Hengqin Island
The HPR came into effect in 2011 and was only applied to the Xiangzhou District of Zhuhai instead of whole Zhuhai city; HPR was actually not applied to Hengqin District. Also, we have not seen any follow-up adjustments to the HPR after the “New Five National Measures” (“新國五條”) published by the central government in February 2013.
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Macau Hengqin Roadshow
Figure21: Zhuhai commodity property construction data (2008 to 1H2013)
Area under construction Area of construction commencement Area completed m sqm 20 17.75 18 16.53 16 15.06 14 11.73 11.43 12.11 12 10 8 6 4.01 3.71 4.02 4 3.16 3.16 2.93 3.53 3.49 2.10 1.48 2 2.01 0.97 0 2008 2009 2010 2011 2012 1H2013
Source: CREIS, Maybank Kim Eng
Figure 22: Zhuhai commodity residential property prices
ASP (CNY/ sqm) MoM (%) YoY (%)* 13,500 35 13,000 30 12,500 25 12,000 20 15 11,500 10 11,000 5 10,500 0 10,000 (5) 9,500 (10) 9,000 (15) Oct 10 Oct 11 Oct 12 Apr 11 Apr 12 Apr 13 Jun 10 Jun 11 Jun 12 Jun 13 Jun Feb 11 Feb 12 Feb 13 Aug 10 10 Dec Aug 11 11 Dec Aug 12 12 Dec
* YoY data available since Jun 2011 Source: CREIS, Maybank Kim Eng
Figure 23: Zhuhai commodity property ASP and area sold (2008 to 1H2013)
Area sold (m sqm) ASP (CNY/ sqm) 3.5 12,000
3.0 10,000 2.5 8,000 2.0 6,000 1.5 4,000 1.0 0.5 2,000 0.0 0 2008 2009 2010 2011 2012
1H2013
Source: CREIS, Maybank Kim Eng
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Gaming
Inside Sands’ Paiza Club. As we made our way across the Lotus Gate border checkpoint, our first stop was the Venetian, one of the must-see casino properties for any visitor to Macau. As we alighted from our bus at the Venetian’s West Lobby bus terminal, the entrance was teeming with tourists there at the peak of summer holidays. We had the privilege of having the investor relations director, Jason Cheong for a tour around the mass market floor at the Venetian as well as a glimpse into the Paiza Club’s gaming rooms. Investors were enthusiastic about Sands’ first mover status in the mass-market segment. Sands shared with clients that it will continue to expand its retail space, a fourth St Regis- branded hotel tower and another casino within Sands Cotai Central in 2014. This is in addition to its USD2.7b construction of the Parisian that will be completed at the end of 2015 and would include about 450 tables and 3,000 rooms. The rooms will be fashioned in a European theme similar to the Venetian, but slightly smaller in size, and would be expected to fetch around USD200 per night. A niche in the mass market space. Sands continues to target the mass market segment, a segment which other operators have neglected in the past when everyone wanted to have a share of the VIP business, which was growing at phenomenal rates in 2009. However, as the VIP segment faces headwinds from a slowing Chinese economy and a greater oversight on corruption, the mass market segment seems to be the focus of casino operators these days for its resilience and high-margin profitability. Sands has introduced innovations to the grind mass market gaming segment with new low-limit “Fast Action Baccarat” and “Electronic Games Stadium” which were fully packed during our visit, as they capitalise on their large resort floor space and network of affordable hotels. In a landscape of constricted gaming supply amid high gaming demand, operators have mostly raised minimum bets in the past year to raise table yields, though Sands seems to have found a niche within the industry amid the competition. Sands’ sustainable value. Going forward, the company plans to return about USD1.4b in dividends for the year. While it maintains no dividend policy, the target for a 10% increase in absolute dividends seems to be sustainable according to management. Sands has received government’s approval to sell its Four Seasons apartment and is now working with the government on the finer details. It is worthy of note that Sands has the largest retail floor space in Macau, a growth area for Sands, which managed to rake in USD239m in FY12; revenue is expected to grow 25% this year. Sands sees no urgency to monetise its retail segment given that the segment’s valuation potential is still growing and a fair capitalisation rate is difficult to pinpoint as this juncture. Figure 24: Venetian Fast Action Baccarat tables Figure 25: Sands Macau Electronic Gaming Stadium
Source: Company, Maybank Kim Eng Source: Company, Maybank Kim Eng
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Next stop: SJM’s Grand Lisboa. We traveled over to the Macau peninsula, to arguably one of the most iconic properties in Macau amongst tourists, the Grand Lisboa. We were guided by Summy Chu, the manager of investor relations for a tour of mass-market and premium mass-market segments of the property. During the meeting, SJM shared with us its future expansion plans which include expanding the premium mass segment at Grand Lisboa, refurbishment of Jai-Alai and the much-anticipated SJM Cotai.
Peninsula’s organic growth. SJM continues to leverage on its Lisboa brand name to achieve organic growth on the Macau peninsula. It plans to reallocate 30 to 35 more mass-market tables to the Grand Lisboa from Jai Alai, which is temporarily under renovation and is expected to add about 100 new hotel rooms. Management is also considering expanding the first floor of the Grand Lisboa and also revamping the upper first floor restaurant to house more premium mass-market tables. Other future plans involve maximising the use of the sky bridge linking Grand Lisboa and Casino Lisboa. We also discussed with SJM the impact of the Macau Legend Development (1680 HK, Not Rated) receiving 350 new gaming tables from the government. SJM currently shares 4% of the top line of its satellite casino operations at Babylon casino.
A break at Cotai. The company is currently in negotiations with Angela Leong to co-develop the land south of its gazetted plot at Cotai. It is also waiting for the construction permit from the government and we expect SJM to announce more plans for its Cotai project, which would likely feature a high-end boutique hotel such as the Bulgari branded hotel that was recently signed in Shanghai. Client’s questions were generally centred on the growth outlook for the company being constrained by space on the peninsula.
Value stock offering strong dividends. As the cheapest gaming stock in Macau on a EV/EBITDA basis, the market has priced SJM as a value stock which also offers a robust forward dividend yield of 5%, though we see Cotai as a strong re-rating catalyst.
Figure 26: SJM’s Grand Lisboa Figure 27: SJM’s Casino Lisboa
Source: Company, Maybank Kim Eng Source: Company, Maybank Kim Eng
Figure 28: Macau gaming relative valuations Target Share PER EBITDA growth EV/EBITDA ROA Dividend Yield Price Price (x) (%) (x) (%) (%) Name Ticker Rating (HKD) (HKD) 13Y 14Y 13Y 14Y 13Y 14Y 13Y 14Y 13Y 14Y Galaxy 27 Hold 42.8 42.45 19.9 14.7 13.5 28.8 14.3 10.7 16.6 15.6 0.0 0.0 Melco Int’l 200 Buy 18.6 16.62 11.8 9.3 n/m n/m n/m n/m 12.1 13.3 0.0 0.0 Sands 1928 Buy 46.0 42.95 20.3 16.7 37.1 19.8 16.4 13.9 11.9 17.0 3.9 4.8 SJM 880 Buy 23.8 19.68 14.2 12.5 10.1 12.2 10.8 9.6 17.9 19.0 5.3 6.0 Wynn 1128 Sell 18.6 20.85 17.5 15.1 3.4 15.3 13.8 12.6 24.1 24.4 5.4 6.0 MGM 2282 Not rated NR 22.25 16.8 14.8 15.6 11.5 13.1 12.0 27.8 37.5 4.0 4.0 Source: Bloomberg, Maybank Kim Eng
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Takeaways from Neptune management. We ended our day with the investor relations and senior management of Neptune (70 HK, Not Rated), who, over dinner, imparted greater detail on their intriguing operations as a junket investor. Neptune is the largest listed junket investor by Rolling Chip Turnover (RCT) at around HKD20b in FY12, spanning across six junket contracts with an aggregate of 62 gaming tables. The agreements that Neptune has undertaken enable it to share between 0.35 to 0.40% of RCT on a perpetual basis.
Acquisition opportunities in abundance. Investors’ key feedback centred on the possibility of a dividend payout given that Neptune’s investments in the six junket RCT agreements have started to bear recurring cash flow. Management has taken into consideration returning dividends to investors while at the same bearing in mind the opportunity to acquire other junket RCT agreements, especially with all the new casinos developments that will be progressively added to Macau from 2015. The future growth strategy of the company is to continue to acquire one or two junket RCT agreements from the Guangdong Club every year. Acquisition opportunities are plentiful given that Guangdong Club operates 220 tables of which Neptune has only invested in 62.
Management confident that credit event is well managed. Other queries were related to possible credit events that Neptune could be indirectly exposed to as a junket investor. Management appears sanguine that the company has not been advised by auditors to make bad debt provisions since 2007, and the RCT agreements include a profit guarantee clause within.
Figure 29: Neptune invested RCT agreements No. of VIP Attr. Monthly Rolling RCT Tables Interest Chip Turnover Sharing No Casino Agreement (x) (%) (HKDm) FY12 (%) 1 Venetian Hao Cai 12 85 3,800-3,900 0.4 2 Venetian Neptune Ouro 4 85 1,200-1,300 0.4 3 Sands Hou Wan 12 30 3,400-3,500 0.35 4 StarWorld Hoi Seng 6 20 1,000-1,100 0.4 5 StarWorld Luxky Star 17 20 5,000-5,100 0.4 6 Grand Lisboa Hoi Long 11 20 5,200-5,300 0.4 Total 62 19,600-20,200 Source: Neptune
Figure 30: Neptune revenue model
Source: Neptune
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RESEARCH OFFICES
REGIONAL ECONOMICS WONG Chew Hann, CA Suhaimi ILIAS JUNIMAN Regional Head, Institutional Research Chief Economist Chief Economist, BII (603) 2297 8686 [email protected] . Singapore | Malaysia . Indonesia (603) 2297 8682 [email protected] (62) 21 29228888 ext 29682 [email protected] Alexander GARTHOFF Institutional Product Manager Luz LORENZO Josua PARDEDE (852) 2268 0638 [email protected] . Philippines Economist / Industry Analyst, BII (63) 2 849 8836 [email protected] . Indonesia ONG Seng Yeow Regional Head, Retail Research Tim LEELAHAPHAN (62) 21 29228888 ext 29695 [email protected] (65) 6432 1453 [email protected] . Thailand (662) 658 1420 [email protected]
MALAYSIA SINGAPORE THAILAND WONG Chew Hann, CA Head of Research Gregory YAP Head of Research Sukit UDOMSIRIKUL Head of Research (603) 2297 8686 [email protected] (65) 6432 1450 [email protected] (66) 2658 6300 ext 5090 . Strategy . Technology & Manufacturing [email protected] . Construction & Infrastructure . Telcos Maria LAPIZ Head of Institutional Research Desmond CH’NG, ACA Wilson LIEW Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 (603) 2297 8680 [email protected] (65) 6432 1454 [email protected] [email protected] . Banking - Regional . Property & REITs . Consumer/ Big Caps LIAW Thong Jung James KOH (603) 2297 8688 [email protected] (65) 6432 1431 [email protected] Andrew STOTZ Strategist . Oil & Gas . Logistics (66) 2658 6300 ext 5091 . Automotive . Resources [email protected]
. Shipping . Consumer - Regional Mayuree CHOWVIKRAN ONG Chee Ting, CA . Small & Mid Caps (66) 2658 6300 ext 1440 [email protected] (603) 2297 8678 [email protected] YEAK Chee Keong, CFA . Strategy . Plantations- Regional (65) 6432 1460 [email protected] Padon Vannarat Mohshin AZIZ . Offshore & Marine (66) 2658 6300 ext 1450 [email protected] (603) 2297 8692 [email protected] Alison FOK . Strategy . Aviation – Regional (65) 6432 1447 [email protected] Surachai PRAMUALCHAROENKIT . Petrochem . Services (66) 2658 6300 ext 1470 [email protected] YIN Shao Yang, CPA . S-chips . Auto (603) 2297 8916 [email protected] ONG Kian Lin . Conmat . Gaming – Regional (65) 6432 1470 [email protected] . Contractor . Media . REITs / Property . Steel TAN CHI WEI, CFA Wei Bin Suttatip PEERASUB (603) 2297 8690 [email protected] (65) 6432 1455 [email protected] (66) 2658 6300 ext 1430 [email protected] . Power . S-chips . Media . Telcos . Small & Mid Caps . Commerce WONG Wei Sum, CFA Derrick HENG Sutthichai KUMWORACHAI (603) 2297 8679 [email protected] (65) 6432 1446 [email protected] (66) 2658 6300 ext 1400 [email protected] . Property & REITs . Transport (Land, Shipping & Aviation) . Energy LEE Yen Ling John CHEONG . Petrochem (603) 2297 8691 [email protected] (65) 6432 1461 [email protected] Termporn TANTIVIVAT . Building Materials . Small & Mid Caps (66) 2658 6300 ext 1520 [email protected] . Manufacturing . Property . Technology INDONESIA Woraphon WIROONSRI LEE Cheng Hooi Head of Retail Lucky ARIESANDI, CFA (66) 2658 6300 ext 1560 [email protected] [email protected] (62) 21 2557 1127 [email protected] . Banking & Finance . Technicals . Base metals Jaroonpan WATTANAWONG . Mining (66) 2658 6300 ext 1404 [email protected]
HONG KONG / CHINA . Oil & Gas . Transportation . Small cap. Alexander GARTHOFF Acting Head of Research . Wholesale Chatchai JINDARAT (852) 2268 0638 [email protected] Pandu ANUGRAH (66) 2658 6300 ext 1401 [email protected] Alexander LATZER (62) 21 2557 1137 [email protected] . Electronics (852) 2268 0647 [email protected] . Automotive Pongrat RATANATAVANANANDA . Metals & Mining - Regional . Heavy equipment (66) 2658 6300 ext 1398 [email protected] Alex YEUNG . Plantation . Services/ Small Caps (852) 2268 0636 [email protected] . Toll road
. Industrial Rahmi MARINA Andy POON (62) 21 2557 1128 [email protected] VIETNAM (852) 2268 0645 [email protected] . Banking Michael KOKALARI, CFA Head of Research . Telecom & equipment . Multifinance (84) 838 38 66 47 [email protected] ICAKSONO Ivan CHEUNG, CFA Adi N. W . Strategy (852) 2268 0634 [email protected] (62) 21 2557 1128 [email protected] Nguyen Thi Ngan Tuyen . Industrial . Generalist (84) 844 55 58 88 x 8081 [email protected] UNUS Jacqueline KO, CFA Anthony Y . Food and Beverage (852) 2268 0633 [email protected] (62) 21 2557 1139 [email protected] . Oil and Gas . Consumer . Cement Hang Vu Jeremy TAN . Infrastructure (84) 844 55 58 88 x 8087 [email protected] (852) 2268 0635 [email protected] . Property . Banking Trinh Thi Ngoc Diep . Gaming Karen KWAN PHILIPPINES (84) 844 55 58 88 x 8242 [email protected] (852) 2268 0640 [email protected] Luz LORENZO Head of Research . Technology . HK & China Property (63) 2 849 8836 [email protected] . Utilities Philip TSE . Strategy . Construction (852) 2268 0643 [email protected] Laura DY-LIACCO Dang Thi Kim Thoa . HK & China Property (63) 2 849 8840 [email protected] (84) 844 55 58 88 x 8083 [email protected] Warren LAU . Utilities . Consumer (852) 2268 0644 [email protected] . Conglomerates Nguyen Trung Hoa . Technology – Regional . Telcos +84 844 55 58 88 x 8088 [email protected] Lovell SARREAL . Steel . Sugar INDIA (63) 2 849 8841 [email protected] . Consumer . Resources Jigar SHAH Head of Research (91) 22 6623 2601 [email protected] . Media . Oil & Gas . Cement . Automobile Luz LORENZO / Mark RACE . Cement (63) 2 849 8844 [email protected] Anubhav GUPTA . Conglomerates (91) 22 6623 2605 [email protected] . Property . Metal & Mining . Ports/ Logistics . Capital goods . Gaming . Property Katherine TAN Urmil SHAH (63) 2 849 8843 [email protected] (91) 22 6623 2606 [email protected] . Banks . Technology . Construction . Media Ramon ADVIENTO Varun VARMA (63) 2 849 8845 [email protected] (91) 226623 2611 [email protected] . Mining . Banking
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APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES
DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice. This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report. This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect. This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report. Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. Thailand The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect. US This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.
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DISCLOSURES Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the State Securities Commission of Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.
Disclosure of Interest Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Singapore: As of 12 August 2013, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission. As of 12 August 2013, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.
OTHERS Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.
Definition of Ratings Maybank Kim Eng Research uses the following rating system: BUY Return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends) SELL Return is expected to be below -10% in the next 12 months (excluding dividends) Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Some common terms abbreviated in this report (where they appear): Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax
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Malaysia Singapore London New York Maybank Investment Bank Berhad Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Securities Maybank Kim Eng Securities USA (A Participating Organisation of Maybank Kim Eng Research Pte Ltd (London) Ltd Inc Bursa Malaysia Securities Berhad) 9 Temasek Boulevard 6/F, 20 St. Dunstan’s Hill 777 Third Avenue, 21st Floor 33rd Floor, Menara Maybank, #39-00 Suntec Tower 2 London EC3R 8HY, UK New York, NY 10017, U.S.A. 100 Jalan Tun Perak, Singapore 038989 50050 Kuala Lumpur Tel: (44) 20 7621 9298 Tel: (212) 688 8886 Tel: (603) 2059 1888; Tel: (65) 6336 9090 Dealers’ Tel: (44) 20 7626 2828 Fax: (212) 688 3500 Fax: (603) 2078 4194 Fax: (65) 6339 6003 Fax: (44) 20 7283 6674
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