The launch of Macau junket operator Suncity’s new Vietnam integrated resort, Hoiana, in 2019 will likely put them in a strong position to bid for Macau’s seventh casino license should the government opt to award one, according to Macau-based analyst Grant Govertsen.
In a Monday note outlining the progress and potential impact of Hoaina following a recent visit to the site, Govertsen suggested that Suncity’s huge Macau market share, coupled with the quality of its Vietnam project, could have a genuine impact on Macau’s VIP volume. More importantly though, it could also put Suncity in the running to become the city’s seventh concessionaire once the license renewal process kicks into gear from 2020.
“In regards to the license rebid process in Macau, Hoiana will put them in a better position to win a license (in the event a seventh license is issued) not only because Suncity will be a bonafide IR operator with local roots, but that licensing Suncity would also repatriate VIP dollars to Macau where it provides a benefit to the local community,” Govertsen said.
In this regard, the fact that Suncity could pull some business away from Macau also works in its favor.
“The reality is that Suncity will be in a position to redirect a real amount of VIP volume to Vietnam beginning next year,” Govertsen continued. “The scenario we provide herein (US$15 billion in quarterly roll) is the equivalent of 7% of total VIP volume in Macau in 2019E.
“Of course, not all of this play would be diverted from Macau – some would be from Southeast Asian customers – but regardless, it could have a several hundred basis point impact on Macau VIP beginning later in 2019.
“While it is virtually impossible to isolate the impact to Macau due to the growth in VIP in other regional markets, we think that Suncity’s transition to becoming a casino principal brings with it risks to Macau and brings with it a positive new angle for Suncity as it relates to the potential for obtaining a Macau license.”
Govertsen described construction on Hoiana upon his recent visit as “meaningfully underway” and on track for Phase 1 to open as planned in mid-2019.
He also noted the significance of Suncity’s growing presence in emerging markets, including Cambodia where it will launch a VIP room at recently opened Naga2 on 1 March.
“Simply put, Suncity would not be entering markets like Cambodia but for the fact that they find the quality of supply to be attractive enough for their customers,” he said, noting that junkets like Suncity find high-quality properties such as Naga2 great alternative for their players.
“During 4Q17, Naga generated US$10.1 billion in rolling chip volume, primarily as a result of opening Naga2 in early November. We mention the Naga metrics because 1) this rolling volume was accomplished without the benefit of a dedicated Suncity room, and 2) it demonstrates that Macau-flagship-like levels of rolling chip volume can be generated even in places like Cambodia.
“With this in mind, and in the context of Suncity being the dominant global VIP junket and Suncity’s Hoiana IR being of very high quality, there is no reason Hoiana can’t similarly generate Macau flagship levels of VIP volume (if not higher).”
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