Monday, January 15, 2007




Star Cruises & Resorts World In Macau

Star Cruises was suspended late last week - ask anyone, when they heard of the suspension, the first thing on their minds was "fund raising exercise...again la". Only, this time its a bit different. Genting group has two "problems", the underperforming and capital hungry Star Cruises, and the excellent balance sheet and cash yielding but dormant Resorts World. Genting is solid with its power plants, gaming, etc... Genting International is the same with the integrated reorts.

Resorts World's only attraction is the world's biggest hotel and the sole highland casino in Malaysia. Its making money but growth is very limited. Star Cruises Limited, a 34.4% owned associate of Resorts World, is the third largest cruise line in the world with a fleet of 20 cruise ships. But Star Cruises has brought more funding problems than positive results. If Star Cruises continue to perform badly, it will eventually suck most of the cash off Resorts World, plus as long as Star Cruises is an anchor, it will drag down Resorts.

You can see shades of Genting's strategy when they included Star Cruises as a 25% jv partner in the Sentosa IR project. Just recently, a fresh development in Macau has required one of the new operators to sell down his stake as required by the authority - the operator being Galaxy (Packer junior is a partner in the group). This is possibly the best and only chance for Genting group to get a ... not even a foothold, more like a toehold into Macau.

If successful, it will rescue propel Star Cruises up the gaming chart. More synergies could be seen ferrying patrons from Macau to Sentosa - gambling all the way. Chances are the gaming revenue will eventually surpass the cruise liner revenue and diminished its importance. The negative thing is how will Star Cruises pay for the stake. The other thing being, Galaxy is not the numero uno operator in Macau, and is unlikely to rank first or even second on the list of places for visitors to go to - so its clout and earnings power and drawcard will not be as strong as the American players.

Speculation is rife in Resorts World as Star Cruises has been suspended but don't go overboard, pardon the pun, its not that exciting, and chances are Star Cruises/Resorts will have to overpay to get the stake.

3 comments:

doraiddd said...

star cruises 75, jenntiing intl 25 on macau.

what if stanley (ho of macau, not clubs of london) would willingly be part of the capital raising exercise? say 5% equity?

and what if galaxy can become universe under star?

but What if there's some really really poor results coming up?

finally what if we all run out of milky ways to chew on?

Rohan_888 said...

Macau is in a giant boom, thanks to Sands casino recovering its cost within one year. Just been there, it is pretty unbelievable, The Venetian alone already is so huge. In total they are now building 7 new casino's. This huge boom will surely be followed by a huge bust.

Salvatore, any news about the 50 billion USD issue, ...........?

Salvatore_Dali said...

hi guys,

selling 5% to Stanley might be a prelude in getting funding to buy the 20% stake in Galaxy.


i still think the two american players will garner the bulk of the crowds and high rollers ... others will get the crumbs.

the US 50bn, well, don't know enough to comment ... does not sound like something Badawi would get his hands on, more like something KJ would get his hands on ... very silly indeed if true. How does one even contemplate driving through this deal that does not taint oneself?? Need come clarification fast - buggers like Ron Bleyer do exist, and they prey on emerging countries or government authorities with a weakness for corruption, or the ability to push through deals/programs with limited requirements on transparency / due diligence / competitive bidding. I hope this is not true.