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NagaCorp’s Chen the new casino king in town?

TheEdge Tue, Apr 02, 2019 03:00pm - 1 year ago

BASED on Forbes Malaysia’s 50 Richest list for 2019, there is a new casino king in town.

Sixth on the list is NagaCorp Ltd founder and CEO Tan Sri Dr Chen Lip Keong, who leapfrogged Genting Bhd chairman and CEO Tan Sri Lim Kok Thay, who is in seventh place.

Lim, who has suffered a number of setbacks at home and abroad in the past 12 months, dropped a notch this year as his fortune fell by US$300 million or 6.4% to US$4.4 billion.

In contrast, Chen, who was featured on the cover of Forbes Asia last year, has seen his wealth swell by US$1.7 billion over two consecutive years, growing from US$1.6 billion in 2017 to US$3.3 billion last year, before hitting US$5 billion this year.

Indeed, over the past five years, there has been a sharp divergence in their fortunes (see chart).

While Lim was among the 30 tycoons on Forbes’ list who saw their wealth shrink, Chen was one of 11 whose wealth increased.

Crucially, it also puts him ahead of Lim as Malaysia’s richest gaming tycoon — a first for the self-made casino operator who won Cambodia’s first gaming licence in 1994.

Lim, on the other hand, is a second-generation gaming baron who heads a sprawling business empire inherited from his late father, Tan Sri Lim Goh Tong — a legendary rags-to-riches gaming mogul who died in 2007.

Does the 2019 list mark the beginning of a power shift in the gaming industry? Is Chen the new casino king in the country?

Chen’s net worth may now be higher than Lim’s, but industry experts whom The Edge spoke to point out that the two tycoons operate in different countries with different business environments at different stages of development.

“When we compare their wealth, we are essentially comparing the market capitalisation of Genting and NagaCorp. Obviously, Genting’s share price has been coming down whereas NagaCorp’s is rising steadily. But share price is only one of many wealth measurements,” says an industry veteran.

“From a business perspective, Genting is a giant, and NagaCorp is relatively smaller. NagaCorp only has operations in Cambodia. While it is attempting to go to Russia, Genting is already in the US, the UK, Singapore and the Philippines.”

The industry veteran reiterates that in terms of the size of their business empires, Genting is much larger than NagaCorp. Moreover, it is more established with many more casinos, tables and gaming machines.

“To me, without a doubt, Lim is still the casino king, 100%. Personally, I don’t think Chen has really overtaken Lim. If I were to bet, I will definitely put all my money on Lim,” he says.

Another industry observer concurs.

“Chen can’t get into Las Vegas but Lim has already been in the US for a long, long time. It is very difficult to get a casino licence in the US as the country has higher reporting standards. But Cambodia is a different story; it’s all about network and connections,” he observes.

The industry observer adds that Chen is enjoying favourable business conditions in Cambodia. “Firstly, it is a monopoly. Secondly, Cambodia is quite near to China and China has been supporting Cambodia in a big way. A lot of people from China are coming to gamble in Cambodia,” he says.

NagaWorld — operated by Chen’s Hong Kong-listed NagaCorp, whose casino licence is good for 70 years and includes a 40-year monopoly within a 200km radius of Phnom Penh — is no doubt the most prominent casino in Cambodia, boasting 600 gaming tables and more than 5,000 gaming machines.

In addition to NagaCorp, Chen is the controlling shareholder of Karambunai Corp Bhd, Petaling Tin Bhd and FACB Industries Inc Bhd.

A gaming analyst admits that he was surprised when he heard of Chen surpassing Lim in the casino stakes, but he says he did not read too much into it.

“To me, it’s not something significant because Lim is still the real Malaysian casino king from many perspectives. He has the diversity — Genting is everywhere in the world. That’s more important than his personal wealth,” he says.

He acknowledges, however, that NagaCorp has done very well in recent years because the largest gaming entertainment company in the Mekong region has been adopting Macau’s junket system.

As for Genting, Forbes writer Pamela Ambler says Lim has been “vexed” by political and legal tangles at home, combined with business ills abroad in the past year. As a result, Genting’s shares have tumbled 17% since the 2018 list.

Faced with a large budget deficit and burgeoning debt, the Pakatan Harapan government led by Prime Minister Tun Mahathir Mohamad announced in November last year a significant hike in the casino gaming levy to 35% from 25%.



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