SJM share price falls 4 percent on operational concerns

Billionaire Stanley Ho has given up most of his stake in the parent of SJM Holdings Ltd to family members, accelerating the handover of his Macao casino empire 10 months after the 89-year-old chairman left the hospital.

Ho gave up a 31.7 percent stake in Sociedade de Turismo e Diversoes de Macau (STDM) to two companies owned by members of his family, according to a statement Monday from SJM, Asia's largest casino operator. He "no longer has an attributable interest" in STDM, the statement said.

SJM fell the most in a month in Hong Kong trading on concern the ownership transfer may affect decision making. Ho, who held a gambling monopoly in Macao for four decades until 2004, was discharged from hospital in March 2010 after seven months and two operations.

"He's been the real strength," Andrew Sullivan, director of institutional sales at OSK Securities Hong Kong Ltd, said by phone Monday. "Now, instead of dealing with Stanley, you may deal with a lot more people. It introduces a huge element of uncertainty in what is already a cut-throat business."

SJM fell 4 percent to HK$13.80 at the close of trading in Hong Kong Monday. It earlier slid as much as 8.9 percent. The stock has more than tripled in the past year.

The 31.7 percent stake in STDM will be held by Lanceford Co, according to the statement. Action Winner Holdings Ltd will hold a 50.55 percent stake in Lanceford and Ranillo Investment Ltd will have 49.45 percent.

Action Winner is owned by Ho's third wife Chan Un-chan, according to an e-mailed statement from Brunswick Group LLP, the public relations company for Lanceford. Ranillo Investment is owned by Ho's children Pansy Ho, Daisy Ho, Maisy Ho, Josie Ho and Lawrence Ho, the statement said.

"Stanley Ho is getting old," Victor Yip, Hong Kong-based analyst at UOB-Kay Hian Ltd, said by phone. "Today's action is part of his plan to distribute his wealth to family members. SJM's daily operations are already handled by Ho's competent assistants."

Ho now holds 100 shares of STDM, according to SJM's statement to the Hong Kong's stock exchange. SJM holds the biggest market share in Macao, the world's biggest gambling hub, and is 56 percent owned by STDM, according to data compiled by Bloomberg.

"Stanley Ho's effective stake in SJM is lowered to less than 2 percent," Karen Tang, a Hong Kong-based analyst for Deutsche Bank AG, said in a note to clients Monday. "While this may create near-term uncertainty, we think this is long-term positive as it further lowers succession risks."

"There will be no change in management or strategic direction" after the transfer, SJM said in its statement.

Ho last month transferred his 7.7 percent stake in SJM to companion Angela Leong, mother of his five youngest children. Shun Tak Holdings Ltd, a property developer that also operates ferries between Hong Kong and Macao, on December 2 said Ho cut his direct ownership in the company in favor of two holding companies in which his children have stakes.

Bloomberg

(HK Edition 01/25/2011 page3)