Casino operator LET takes game to next level in Manila

'Challenges provide opportunities' may be a well-worn cliche but local businessman Andrew Lo Kai-bong found it made perfect sense when he decided to invest in a sinking Macau gambling operator and steer it out of trouble.

Still, Lo says he gave it serious thought before taking the plunge to take over Suncity Group and rebrand it as LET Group (1383), as he reveals details about his audacious takeover for the first time.

Now, LET's fortunes are turning around, as Lo bets big on low-cost overseas markets and a swanky new casino in the Philippine capital Manila. Its stock is up nearly 80 percent this year, and LET expects to swing into a HK$450.6 profit for the first six months of this year, from a loss of HK$387.1 million.

Troubles and takeover

Suncity junket, a private company, was founded by Alvin Chau Cheok-wa and was the world's biggest junket operator. After its fall from grace, the publicly listed company with a similar name but a different business in integrated resorts, Suncity Group Holdings, was taken over by Lo, who was an executive director at the firm, and was renamed as LET last year.

Following the rebrand and disposal of non-core assets, the new chairman is now focusing on overseas markets, including the Manila resort named Westside City that it is developing with local conglomerate Alliance Global Incorporated or AGI as it is known, whose businesses cover real estate, tourism, gaming, spirits and fast-food restaurants including the master franchisee for McDonald's.

Lo believes Westside City holds promise due to the vast population, rapid economic growth and rising middle class in the Philippines.

Suncity's transformation into LET began after Chau was arrested in November 2021 in Macau on charges of illegal gambling and money laundering.

Chau also had to repay HK$340 million worth of loans won on the back of pledged Suncity shares but as he failed to make repayments on time, his holdings were liquidated and a tender for his shares opened in April 2022.

Lo, who was an executive director at Suncity at the time, was the sole bidder and won control of the firm for HK$340 million.

Following the successful bid, Lo became the largest shareholder of Suncity with a 74 percent stake and replaced Chau as chairman.

Troubled over the fate of the company and his co-workers, Lo says he thought long and hard before making the bid on his own steam, in the face of warnings from others about headwinds such as lockdowns amid the Covid pandemic and the grinding Russia-Ukraine war.

Ring out the old

Though the resort in Manila required huge funds, Lo says he was confident about the project as he knows the Philippine market well.

"Challenges and opportunities come together, so I decided to make financing plans for the bid," he says.

Lo's first step was to change the name of Suncity, which was linked to Chau. While Chau was found guilty of wrongdoings in Macau and sentenced to 18 years in jail in January this year, Suncity also had overseas resorts. Therefore, Lo renamed the Hong Kong-listed firm as LET - an acronym for leisure, entertainment and taste - indicating its focus is now on high-end integrated resorts.

In addition, Lo sold a string of non-core assets including a site in Hokkaido, Japan, for more than HK$210 million to repay debts, helping reduce LET's total liabilities to about HK$2.4 billion as of the end last year.

Lo says LET's priority now lies in Manila along with its projects in Vladivostok in Russia, and in Hoi An in Vietnam, where a photoshoot for Miss Hong Kong 2023 proved a huge draw in July.

"If a casino is run properly, it will become a goose that lays golden eggs," says Lo.

And similarly, a competitive integrated five-star resort will generate continuous revenue, he adds.

Though LET is not as big as its peers, it is now targeting markets such as the Philippines, which have low operating costs but the potential to reap huge profits.

LET entered Manila in partnership with AGI's Newport World Resorts, one of the four licensed casino operators in Manila.

Formerly known as Resorts World Manila before AGI took it over in 2022, Newport World Resorts was the first of its kind in the Philippines when it was launched back in 2009.

Platform for growth

The Philippines' rapid growth also gives Lo confidence in the project. The country's population of 114 million is the 13th largest in the world and its middle class has been growing fast amid its transition from an agrarian to industrial economy, just like China 20 years ago.

Also, its economy is projected to grow around 6 percent this year, faster than China's, which is estimated at less than 5 percent.

Further, gambling revenue for the first half of this year amounted to US$2.4 billion (HK$18.72 billion), 14 percent higher than the US$2.1 billion before the pandemic. And the compound average growth of gambling revenue in the Philippines reached 24 percent for the past 10 years, surpassing Macau and Singapore.

New contender

Westside City will be Manila's fifth integrated resort, strategically located in the middle of three competitors, says Lo.

Suntrust Resorts, a listed company in the Philippines and a subsidiary of LET, has a 51 percent stake in the project, and its control would be expanded to 86 percent if all convertible bonds are executed, says Lo.

Westside City will have 300 gaming tables, over 1,300 slot machines, 460 rooms and 33 food and beverage outlets.

The resort will offer US$10 million worth of premium cigars in a special room, rare fine whiskies from all over the world, a spa and a nightclub with swimming pool party services.

As Filipinos are musically inclined and love the opera, four theaters will help distinguish Westside City from its rivals.

Westside City is being built at a cost of HK$8.5 billion. But LET has won HK$3.8 billion funding from a major local bank - a huge loan for a developing country and a vote of confidence from local lenders, Lo concludes.

The resort is expected to open in early 2025.