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SCMP Reporter

As Ho takes chair, entertainment firm will sell 49pc of Kingsway in Macau

Shares in China Star Entertainment, controlled by film producer-turned-Macau casino investor Charles Heung Wah-keung, jumped 21.12 per cent yesterday after the firm announced the sale of a 49 per cent stake in a hotel in Macau for HK$308.7 million.

The stock gained 7.5 HK cents, closing at 43 HK cents, up from the previous close of 35.5 HK cents after it announced the sale of the Kingsway Hotel stake.

Kingsway Hotel owns a three-star, 15-year-old property with 383 rooms in Macau and the deal values the hotelier at 47 times  net profit for last year and 16 times net asset value.

The stake will be sold to Li Chi-keung,  chairman of privately held VIP gaming operator Macau Golden Group and former Jockey Club managing director, and his wife.

In addition, gaming magnate Stanley Ho Hung-sun's SJM-Investimentos (SJMI) will pay HK$6.3 million for a 1 per cent stake.

SJMI is also in talks to add an annex on a site of a car park  next to the casino.

China Star will retain 50 per cent of the hotelier which will be chaired by Mr Ho with Mr Heung taking up the position of deputy chairman.

Gaming revenue from Macau's 24 casinos surged 23 per cent last year to US$6.87 billion, overtaking the iconic Las Vegas Strip.

But competition has been rising with an addition of seven new casinos last year, doubling the total number of gaming tables to 2,762 at the end of December.

China Star's agreement with Mr Ho calls for SJMI to expand the casino to include at least 50 mass-market gaming tables over a maximum floor area of 100,000 square feet.

Under a revenue-sharing deal with Mr Ho's licensed gaming company, Kingsway Hotel receives 40 per cent of the net winnings from table games and 31 per cent of the net win from slot machines.

China Star paid HK$490 million for a 61.5 per cent effective interest in the property in June  last year, and purchased the remaining 38.5 per cent  in January for HK$240 million.

Following the hotel acquisition, investors led by dealmaker Charles Chan Kwok-keung's Hanny Holdings paid HK$168.5 million for convertible bonds that can be swapped into 49 per cent of China Star's enlarged share capital.

Meanwhile, China Star also said a separate share placement agreement would lower its stake in a Hong Kong-listed associate, Riche Multi Media, to 28.69 per cent from 34.43 per cent.



China Star stock jumps 21pc on hotel stake deal