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  • Starts off discussing the Cape Verde investment, and calls it his first step in diversifying outside of Macau. 

  • Published a profit warning a week ago, and briefly cited the weakening gaming market in Macau

  • They feel comfortable with their positioning in Macau particularly within the mass market segment 

Cape Verde Comments

  • Cape Verde is also a former Portuguese colony

  • They believe Cape Verde is well positioned for tourism expansion from markets like Europe, South Africa, Western Africa and South America

  • Main Airport is 10 mins from their property site 

  • Site will be in Praia the capital city, on the main island of Santiago

  • They view it is as the next Macau. Say the govt. is into new alternatives for growth. 

  • They'd like to bring about the same themes as Macau

  • They are aiming for completion of the integrated resort in 3 years 

  • They received the Island's 2nd license for land based gaming. HLT has the first license. 

  • Macau Legend now holds the exclusive license for online gambling/gaming and betting

  • They look to continue to build off the Portuguese culture and go where there are competitive tax rates, growing and established tourism, but look to help other countries grow and prosper along the way

  • Capital budget for the project 250 million euros, and will use the same contractors as they use in Macau. Reason being is they want to minimize execution risk

  • Property will include beach access and will also have island access.  

  • 150 hotel rooms, and additional Boutique hotel will be on the property

  • Cape Verde room rates and occupancy were cited as strong 

  • They were awarded two land leases, one for beach and for the island, both are 75 year long leases and offer favorable terms (which were not disclosed).

  • Taxes for their land based casino operations will be as follows

  • 10% on GGR for Mass

  • 7.5% on GGR for VIP 

  • There is no limit on the amount of tables or slots they can operate 
  • Cape Verde government is using Macau gaming laws as a basis for their laws

Comments on Cape Verde as Country

  • Noted as a safe and stable place 

  • Relatively developed and growing 

  • They have been enjoying a serious ramp in visitation, mostly from Europe and Africa

  • Flight times to Europe 3-6 hours 

  • Flight times to Brazil 3 hours 

  • Lots of Chinese in the surrounding areas

  • Europeans do not need visas 

  • Macau citizens do not need visas

  • Chinese citizens can obtain visas, process cited as "very simple and fast"

  • The project will include shopping and attempt to mix in Asian culture 

  • They will be rolling out online betting and gaming site which will open prior to the land based casino

  • They have plenty of financing available and have been approached by many firms and local banks that want to underwrite the financing on the project

Q & A

  • Project will be on the island of Santiago, the main commercial island, with the most people and visitation. 
  • Cite that they will tap into tourism junket business in Europe as a big opportunity 
  • There are 4 intl airports on CV, and their property is next to the biggest one, which is currently getting an upgrade
  • Caribbean feel to the island, it's not like the Maldives or Fiji 
  • Chow focused on the idea the Santiago could be a good spot for the VIP market, citing that business people travel in and out. Wealthy from Africa and Europe. 
  • They are seeking first mover advantages, by being the first to offer a integrated resort experience. Islands close by and will offer great experience for guests for day trips
  • They expect customers from the UK, the Netherlands, Angola, South Africa, Western Africa, South America (short flights)
  • Why Cape Verde? Opportunity to generate a new market in this part of the world, and could compliment and draw European gamblers and specifically all the Chinese people who have immigrated to Europe. 
  • Chow saying that there is potential for GGR to bigger than European casino market. 
  • Basically, there is no comp in the area.
  • Tax advantages are a huge for the bottom line
  • Continued to cite that they feel there is a need for a casino 
  • Question on Market size? EBITDA? ROIC? 50 tables 150 slots/EGT's - "EBITDA margin can be better than Macau"
  • Would not give any forecasts on EBITDA
  • ROIC - something starting with "2" and has to beat Macau which they are confident that it will
  • How will they finance the project?  As of now, they will seek a bank loan, term loan financing + a mix of corporate level financing 
  • How should the hotel perform? A lot of the hotel rooms can be sold - both non gaming EBITDA has potential to be very strong 
  • Chow has a very close relationship with the CV govt. 
  • Question about the project prior to the full opening:  Online/sports betting component and exclusivity, a major a plus. But they will not operate a temporary casino, Chow doesn't want to hurt the brand name before official opening.
  • Chow cited huge opportunity in being a leader in online gambling and sports betting on the island and in the region. 
  • For construction - Phase 1 shore zone, Phase 2 island zone - both should be done at the same 3 year period.  
  • Angola very relevant, because of the influx of Chinese companies and Chinese people there. 
  • Synergies from Macau for the new project? Chow mentioned that marketing will create the network, and Chow's network is strong and will leverage that in the future to bring customers to the project. Operational synergies exist. Govt. connection, hotel oprations synergies from the Macau properties. 
  • Chow calls Cape Verde the new Caribbean, because it is untouched and offers the same qualities. 
  • Online gaming exclusivity is huge. anyone from a country with legalized online gaming can clear through them. They cite it as an opportunity for online gaming around the world. 
  • No guidance when the online gaming will begin, but will definitely be before the land based casino. They would like to use it as a marketing tool for the resort. 
  • How big of a portion should the online gaming be to EBITDA? No projections. Land based gaming contribution tends to be the biggest, then online gaming, then regular hotel operations. 
  • Question on their balance sheet being stretched, needing for additional funding for these new projects and expansions?
  • Chow: "Fisherman's Wharf needs no more financing or funding efforts, and the second hotel is approved, and will be building it as fast is the labor market permits."
  • CV project should be heavily sought after in terms of debt financing, and they expect to finance very competitively on any future projects. 
  • For Macau they will not be laying off any workers but will be relocating workers around their existing properties after closing some of their VIP tables. 
  • Cites China stock market crash as potential to further erode junkets earnings and the Macau gaming market in general
  • Smoking ban? Chow doesn't think the government will put full ban on smoking and sees room for the government and casino operators to make a deal.