Inside Asian Gaming

The Analysts’ Take … AARON FISCHER Head of Asian Consumer and Gaming Research CLSA Asia-Pacific Markets, Hong Kong Aaron Fischer joined CLSA in 2005 and served two years with the company in Tokyo, covering the consumer sector, and 18months as regional head of property research. Before joining CLSA he spent five years in London with Goldman Sachs as a consumer analyst focusing on luxury goods and cosmetics, and was at Arthur Andersen prior to that as a chartered accountant before moving into research. Mr Fischer graduated from the University of Melbourne in 1994 with a BCom degree. He is a chartered financial analyst. “We’re trying to tailor the growth investors. It is distinct. You have a portfolio manager who has a yield fund or a growth fund or whatever, and they’re different people. So these growth investors are saying, ‘Ah, look, I’ve made good money on Macau, but I just don’t feel comfortable buying up on yield now. It doesn’t suit my style.’ And the yield investors are still trying to get comfortable with the sector. These yield guys tend be conservative investors. They buy utility companies. So it takes some time for the investor base to transition. We feel like we’re on a bit of a crusade, just trying to get people to think about it in a way that’s different. If we are successful, if we can really get the yield investors to replace the growth investors it’s going to make our lives a lot easier because we’re not going to have these hedge funds calling up and saying, you know, ‘What happened two days ago?’The yield investors will think more long term.” GRANT GOVERTSEN Managing Partner and Lead Analyst Global Gaming Research Macau, Macau Grant Govertsen is a founder of Union Gaming Group, a portfolio of complimentary companies focused exclusively on the global gaming industry and specializing in global equity and credit research, investment banking, trading and gaming-related market and economic analytics. Mr Govertsen spent six years on Wall Street supporting research coverage on Deutsche Bank’s gaming platform and serving as lead analyst for the bank’s Lifestyle Brands & Leisure Products sector. Prior to joining Deutsche Bank, he worked at several boutique economic consulting firms responsible for feasibility and market studies related to gaming and real estate. He began his career with Coopers & Lybrand’s Financial Advisory Services group. “The Macau gamers, I suppose, there are many ways to look at it. It’s kind of like, I wouldn’t say home field advantage, but raising capital in Asia versus the US makes some sense because it shows you’re dedicated to the region. It’d be a different story if you just went to the US to raise money to build in China. So listing in Hong Kong allows for greater involvement on the part of Asian investors. And I think, optically, that’s important if you’re Beijing or, by extension, the Macau government. It’s showing that you really want to be rooted in the region, that it’s not foreigners necessarily becoming rich via stock appreciation, it’s also Chinese people, Chinese investors, Chinese funds, so that’s good. Will it make a difference in the grand scheme of things as far as one operator getting preferential treatment over another? I don’t think so. Although I suspect that an operator with a greater exposure to Chinese investors probably would look better at the margin in the eyes of the government.” SEAN MONAGHAN Senior Consumer and Gaming Analyst, South East Asia Global Research HSBC, Singapore SeanMonaghan is responsible for the coverage of the South East Asian consumer sector and Asia regional gaming for HSBC. Mr Monaghan has spent 20 years working with casinos, hospitality development and property companies and investment banks analyzing the consumer, property and gaming industries. He has been part of casino bid teams, written strategic plans for major casino integrated resorts and consulted with governments on casino development. He has been an active contributor to gaming and property conferences around the world since 1994. Mr Monaghan is a faculty member of the University of Nevada, Reno and speaks annually at the university’s renowned Executive Development Program. “All the companies are getting better at talking to global investors. I think if you look at the structure of the accounts or the releases maybe five years ago, they were quite varied, with limited information, or at least inconsistent information. What’s happened is you’ve seen an increase in consistency and quality and type of information and the resources dedicated by the companies to investor relations. There’s always been a perception towards Macau that it is very suspect or challenged or whatever. But as soon as people start seeing all the information on VIP or mass or win rates or junkets, I think their confidence level increases. I think the company resources dedicated to that is why it has improved. That in itself is not going to be a reason for an investor to invest, you have to actually perform, and I think the companies have performed very well.”