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SJM To Offer IPO

The Wall Street Journal, a somewhat reputable publisher (wink wink), is reporting that Dr. Stanley Ho has revived plans to launch an IPO of SJM in the hopes of raising US$1.9B of funds for future projects. SJM will be offering 25% of the company on the Hong Kong Stock Exchange.

Some folks in the gaming investment world think that gaming businesses listed on the Hong Kong Stock Exchange (Galaxy, for example) smell of pink sheet penny players that shouldn't be trusted. I guess their reasoning is that if the company is 'for real' they'll IPO on the big boards in New York. If SJM isn't a real deal player, then I guess it's time for me to pull the plug on MacauTripping and pursue my dream of being a Cover Girl spokesmodel.

With SJM's HKSE IPO I'm going to venture a guess here and say that it will probably rise relatively quickly then level off a bit until the funded projects start to take shape. Having SJM answer, at least partially, to shareholders will be a hugely motivating force in the post-Dr. Ho era. I have a hunch that having SJM on the HKSE will caste a bit of a brighter spotlight on Galaxy Entertainment as well, ticking their underpriced shares up also.

As gaming industry becomes more and more globalized, smart investors are going to start looking beyond the US Exchanges for ripe, young investment opportunities... which, at the age of 86, Dr. Ho's SJM IPO is.

Deutsche Bank will be underwriting the early January initial offering. Right now, stocks for Macau operators have been punished pretty regularly. They say high tide raises all boats, but low tide is a great time to get on a boat for cheap. While this may not be be the best time for SJM to capitalize on its theoretical value, it might be a good time for interested investors to get into a currently questionable market that will do nothing but grow. I tried my damnedest to get my 73 year old dad to buy $12 AAPL stock when OS X came out in 2002 but he looked at the questionable state of Apple's direction and passed. Of course, he would have made a mint on it since it has blown through the roof, including two stock splits.

Is it time to shave off some of your over performers and grab a short-term taste of SJM before you sell it to Macau-come-lately's? Well that's up to you to decide. I do have some serious concerns about SJM. Their market share is getting pounded from all sides, and probably will continue to be assaulted for quite a while as Wynn's Diamond Suites, MGM Grand Macau and MPEL's Trinity come online. Their current product array, other than Grand Lisboa, just isn't attractive. I did enjoy my stay at Hotel Lisboa, but the only reason why I would go there, or recommend anyone else going there would be to dine at Joel Robuchon's and get room serviced by the hookers.

SJM will probably get some degree of relief when Grand Lisboa's hotel tower opens, but the real elephant on the peninsula is the seemingly stalled Oceanus project. Once SJM's beached whale monolith makes the jump from the drawing board to the pavement to grand opening... the real casino war in Macau will have begun.

Speaking of Oceanus, has any of our Macau readers seen any progress whatsoever on closing the Yaohan Dept Store and/or Casino Jai Alai?


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