Two things stood out at a launch party three years ago in Macau on a casual Sunday: The hundreds of familiar but not very popular faces from local politics and business, and their appearance at the biggest-ever Tsui Wah outlet, a restaurant famed for its iced milk tea.
In the three years since I still haven’t been able to figure out how these guests were connected except to conclude the host must have a lot of different friends. Today I read in ads in all the city papers that the place has brought in 35 million visitors since day one, and more importantly, a huge windfall for its owner.
Today marks the third anniversary of Galaxy Macau, a casino that contributes most of the HK$10 billion in profit for Galaxy Entertainment Group, propelling Lui Che-woo up the ladder of wealth to make him the second-richest man in Hong Kong at the start of this year.
With apologies to tycoon Li Ka-shing, only a handful of property tycoons in Hong Kong have been able to create a second business that exceeded their original. In Lui’s case, his blue-chip entertainment group now trades at HK$58 with a market capitalization of close to HK$250 billion, or 18 times that of his property flagship K. Wah International.
Who could have thought Lui would hit such a big jackpot and triple the company’s share value in three years?
Perhaps having a casino with friendly franchises such as McDonald, Tsui Wah and iMax made a winning formula but Galaxy stood out for other reasons. It didn’t have the legacy of Stanley Ho Hung-sun’s flagship SJM but, unlike its foreign counterparts Sands China and Wynn Resorts, it enjoyed flying below the radar by not making too much money in Macau.
Despite China’s anti-corruption measures, Galaxy managed to report better-than-peer revenue growth in its Taipa-based outlet, conveniently located one street across from Macau’s best pork bun source, Cafe Tai Lei Loi Kei.
Investors paying 24 times price earnings to buy Galaxy pin hopes on the company replicating the success in its second phase, where it will double in size by adding another 200 luxury retail outlets and another 3,600 rooms in about a year’s time. The wild cards are the HK$10 billion resort development on Hengqin Island and potential casino deregulation elsewhere in Asia such as Japan.
Those openings are still a way off but it just reminds me of one cruel thing about the Galaxy launch: The host who invited me to the party three years ago has not contacted me since Galaxy shares reached HK$50.
I can only conclude that he’s busy counting his money because he had lots of options waiting to expire at HK$4.
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