Three chairmen could pose a problem
After more than 40 years at the top of the casino game in Asia, Stanley Ho has officially retired. Ho’s departure at age 96 was formally approved June 12 at the annual shareholders meeting of his company, Hong Kong-based SJM Holdings, a unit of parent company STDM.
Ho was named chairman emeritus of SJM, according to the South China Morning Post. The company’s board will be co-chaired by three of his intimates: Ho’s fourth wife, Angela Leong, his daughter, Daisy Ho, and Timothy Fok, the son of Ho’s former business partner Henry Fok. Leong will also serve as executive director, and Ambrose So, described by the Post as Ho’s “consigliore,” will be vice-chairman and chief executive. Ho’s third wife, Ina Chan, has been nominated for a post as an executive director.
“My dad has always been the soul of SJM,” Daisy Ho said after the annual meeting. “The most important thing I learned from my father is I have to keep studying for my entire life, and to listen to other people’s opinions with a humble attitude.”
In April, when Ho first announced he would retire, gaming analyst DS Kim said the proposed board structure sounded “a bit messy, with too many interested parties. This complicated structure leaves room for a potential power tussle within the board, given the lack of clear control.”
But SJM stock has risen 51 percent since Ho’s retirement plans were made public. Ambrose So said SJM has recently enjoyed “satisfactory” growth in gaming revenues, and added that mass-market revenues for 2018 could grow by double digits over last year. SJM operates 20 casinos, with a total of more than 1,700 gambling tables and 2,400 slots.
Daisy Ho was already an executive director of the family business and sits on the boards of a number of other important companies including Shun Tak Holdings, where she is deputy managing director and chief financial officer, Inside Asian Gaming reported. Her new role as chairman of SJM has no fixed term and will pay her an annual base fee of HK$1 million (US$127,000) plus allowances of HK$1.3 million from the group, the company announced.
In a statement on Ho’s retirement, SJM Holdings said the gaming kingpin “has justifiably been acknowledged as the founding father of Macau’s gaming industry, which has for some time been the largest in the world in terms of revenue.
“Under Dr. Ho’s visionary leadership, the company and its subsidiaries achieved a significant growth in the past decade. The board expresses its sincere gratitude to Dr. Ho for his invaluable contributions in building a solid foundation for the company’s continuing growth in the future.”
Daisy Ho has said her father is in good health, but the Nikkei Asian Review reports that Ho’s health is failing. He is now wheelchair-bound and is rarely seen in public.
The Review noted concerns that Ho’s company “could fade further into the background along with him,” with multiple chairmen challenged first to get along as co-leaders, and then to “halt the stagnation that has seen the company slip from No. 1 in market share among Macau’s six casino operators in 2013 to joint-fourth last year.”
Though the Macau market grew 19.1 percent overall in 2017, SJM’s revenues remained flat. “Certain stocks are cheap for a reason. We think this is one of them,” wrote analyst Vitaly Umansky of brokerage Sanford C. Bernstein after the new management structure was announced.
“Instead of using Stanley Ho’s retirement as an impetus to make governance and management changes, the company has opted to further entrench the status quo,” Umansky said. “We see no real positive changes to management that could turn the company in the right direction.”
The risk of family infighting may be exacerbated by the sheer size of this family: Ho has 17 children by four wives, many of them working in the casino business. Daughter Pansy Ho runs Shun Tak Holdings, which owns a piece of STDM as well as Macau’s leading ferry operator. She is also co-chairperson and co-owner of MGM China Holdings.
His son Lawrence Ho runs Melco Resorts & Entertainment, a Macau-based global casino operator; he too holds a small interest in SJM. Asked about his father’s retirement and the new leadership, Lawrence Ho said, “Good luck to them. I have been working on my own business over all these years.”
SJM’s fortune could change with the opening of its US$4.6 billion Grand Lisboa Palace, the last integrated resort planned for Macau’s Cotai district, but it’s not scheduled to open until sometime in the second half of 2019, just short of the expiration of SJM’s gaming concession in 2020. And JPMorgan’s Kim thinks the IR has a less than optimal location, separated from the other resorts in Cotai and the light rail system now under construction in Macau.
That said, “They desperately need a presence on Cotai,” according to Grant Govertsen of Union Gaming Asia Securities. “They are the least competitive operator in the market today.”
So blamed the delays on damage from Typhoon Hato in August 2017, and several fires at the construction site.
Forbes columnist Muhammed Cohen called Ho’s retirement “the end of an era.”
“Ho parlayed a 40-year Macau casino monopoly into a multibillion-dollar empire, restoring relevance to Macau that had been absent for centuries,” Cohen wrote. But he added that his departure “leaves SJM confused and incoherent.”
