Inside Asian Gaming

November 2015 inside asian gaming 39 Neptune Group recently concluded memoranda of understanding that will add 64 tables at Grand Lisboa, Wynn Macau and MGM Grand to its existing investments in rooms at StarWorld, The Venetian and Sands Macao. These agreements will more than double its portfolio of tables and triple the total rolling chip turnover in which it shares to about HK$45 billion a month. IAG: With these new investments at Grand Lisboa, Wynn and MGM, what will be the impact for Neptune? Nicholas Niglio: The impact will, I believe, double our earnings, because it’s doubling our capacity. It’s the same system of investment, where the return from the casino, the percentage basis, is going to be the same, 0.4%, and that’s consistent with what we’ve had for the last three to four years. The three properties, not a whole lot of difference in the turnover within the group. These three are probably our higher-end ones, which means it can even be incremental, more than a doubling, because these are our flagships. … Actually, if we had done this a year ago it wouldn’t have had the impact on our financial statements as it will today, because those three properties, the way they’re performing, they’re peaking now. And the increase in monthly rolling chip turnover, obviously that is significant as well. You’ve got to feel good about that. It’s a new start, truly a new start for this company, something that we’re very happy to see. Do you see these deals then as providing momentum for more investments along these lines? Well, it takes us almost to a saturation point. There is a little bit more room to include all the concessionaires. But you can only go as far as the concessionaires. So where do you go from here? The group for years has always had the objective to expand its total portfolio past Macau. I think at the point that we feel Macau has been systematically absorbed, as far as we can go, then I’m sure you’ll see things happening elsewhere. I’m not ruling anything out. Would this include acquisitions? We’re hearing a lot these days about consolidation in the sector, both as a result of a slowdown in VIP revenue growth and the slowdown in China that is having an effect on credit markets. Blast from the Past “It’s been very difficult for the small junkets to partake in this market because the big five control so much of the turnover. They’ve got the same problems and pressures that we have but without the capital and without the infrastructure to exercise adequate controls.” There is some consolidation. I don’t think it has gotten to the point where it’s noteworthy. I mean, what we did is an investment rather than a clear consolidation. It’s a further enhancement of our presence here. It doesn’t change the nomenclature of the rooms themselves. What you’re referring to are takeovers, where you have a medium- size company like [Asia Entertainment & Resources Ltd] for instance, purchasing a small six-table junket. The impact is not noteworthy just yet. However, I’m happy to see that. It’s been very difficult for the small junkets to partake in this market because the big five control so much of the turnover. They’ve got the same problems and pressures that we have but without the capital and without the infrastructure to exercise adequate controls. It forces them to make credit decisions that they may not normally want to make, but they’re almost forced into it. And when you don’t have Nick Niglio