Meister Li hat das Wort:
"If Sino was on the Hong Kong market it would be worth ten times the value," Li says. "We believe Sino Strategic has to emigrate to Hong Kong. We have been exploring the possibility of a secondary listing. We will remain listed here but we have not been getting the appropriate value."
Sino's claim to fame is as Australia's only listed gaming exposure to mainland China, where gambling theoretically is illegal. Unsurprisingly, given the size of this grey market - $US200 billion ($223 billion) or more - the Government wants to get its mitts on the spoils of this trade, to share with the proletariat of course.
While Sino sounds like a nice investment yarn given the sex appeal of Macau to PBL investors, a steady flow of feel-good news has not been enough to stop Sino shares collapsing from their $3.28, 12-month peak in April. Li says Sino - which has the right to offer games such as keno and lotto in the Shanghai province - is simply misunderstood. Our punt is that investors are deterred by the less-than-transparent Chinese market and regulatory systems and the dominant role of Sino's controlling holder, Edward Cheng. Cheng's contacts are seen as pivotal to Sino's success, but may be a 57 per cent stake is too much Teddy to bear.
Some black ink would be nice as well: Sino lost $12.2 million last year, but Li says it's a case of no pain, no gain. "We are still losing money but when you are establishing a significant market share it needs development capital," he says. "I won't make any apology for that."
Revenue-wise, Sino has been achieving record weekly turnover, as it opens more outlets and offers more products off these fixed-cost assets.
Sino this month was bolstered by the inclusion of sports betting and, from early next year, soccer betting. Chinese authorities are trialling the latter in three markets. In Hong Kong - population 7 million - it's an $US8 billion a year market.
Li compares Sino with the move by Melco, PBL's Macau joint venturer, to back-door list its part-owned mainland lottery business, PAL, into a listed HK company, Wafer. It will have an 80 per cent interest in PAL, which will have 500 outlets across China and five welfare lottery games. Sino has 429 outlets - it has the right to open 600 - offering the "full range" of welfare and sports lottery games.
Wafer's market cap has increased by $HK1.903 billion ($300 million) as a result of receiving 80 per cent of PAL's China assets, which offer much lower margins than Sino's operations. "Sino at $1.08 with a market cap of $67 million is looking more and more ridiculous by the day," Li says |
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