Retail investors shun Macau Legend offering

Casino-hotel operator's HK share issue only 17 per cent subscribed despite size reduction

PUBLISHED : Friday, 05 July, 2013, 12:00am
UPDATED : Friday, 05 July, 2013, 5:18am

Casino-hotel operator Macau Legend Development received the cold shoulder from retail investors after it slashed the size of its initial public offering by more than 60 per cent amid fresh uncertainty over the mainland's economic outlook.

Even with the reduced offering, the firm said yesterday only 17 per cent of the retail offer had been taken up.

Macau Legend's rough road to listing has highlighted investors' apathy for new offerings following the poor performances of a slew of newly listed stocks - 13 of 17 this year are trading below their issue prices.

Karen Tang, an analyst at Deutsche Bank, said "the [gaming] sector seems to be priced to perfection" and was trading above its historical average after Macau's gross gaming revenue grew 21 per cent year on year last month, up from 15 per cent earlier this year.

Tang also highlighted "rising risks on China" that could hurt demand from high rollers in the next six months after the mainland's official purchasing managers' index fell to 50.1 last month, only just above the threshold that indicates expansion of production.

Macau Legend, which owns the Fisherman's Wharf, Landmark Macau and Pharaoh's Palace casinos, raised about HK$2 billion from the revised global offering of 934.83 million shares, with 34.9 million shares sold in the Hong Kong tranche. The original plan was to raise up to HK$6.1 billion.

The shares were priced at HK$2.35, near the bottom end of the indicative range.

Sources said the smaller offering had prompted the casino operator to seek additional sources of funding for the refurbishment of its properties and construction of new hotel facilities, something it had not ruled out after going public.

Shares in Macau Legend will begin trading today. There was no activity in the stock in the grey market yesterday.

In contrast to the gloom among new listings, Dynam Japan, one of the biggest pachinko hall operators in Japan, yesterday saw its stock soar 24.3 per cent to HK$18.90 - its biggest one-day gain since it went public last year.

Dynam is the sole cornerstone investor in Macau Legend, with a US$35 million stake.