James Chambers talks to Francis Lui about the world of entertainment
Last year, Galaxy Entertainment won the grand prix for best investor relations by a small-cap company at the IR Magazine Greater China Awards. Francis Lui, executive director and deputy chairman of Galaxy Entertainment and K Wah International Holdings, recently shared with IR magazine his views about doubling market share in the hotly contested gambling resort of Macau and the lessons he has learned from his father, Dr Lui Che Woo, founder and chairman of both companies. 
How do you see your role in investor relations?
Nine years ago, we entered the gaming market only to be met with skepticism from both competitors and investors. We were a small construction materials company challenging the Goliaths of the gaming industry. Our IR department faced an immense challenge in gaining the confidence of investors.
I spent a great deal of time with the IR department to create and implement an effective IR strategy. We focused our energy on targeting long-term investors, over-delivering on our promises, and making much of the long history of our commitment to CSR.
How has your IR effort changed during Galaxy’s 20 years as a listed company?
Our legacy business was construction materials, which is a very localized business, so we had a more local Hong Kong investor base that was familiar with the construction and development activity in Hong Kong. As we transformed the company into a casino operator, we have moved to a full international investor base, so our IR activities changed dramatically.
Today, we have numerous large institutional investors in the Americas, Europe and Asia, and a significant retail investor base in Asia. We focus a lot of our effort on engaging with ‘true investors’ that have a deep understanding of our business, strategy and operations. We like investors that buy into our strategy and appreciate our differences and competitive advantage in being a truly Asian casino operator in Macau.
We conduct regular post-results global roadshows, attend numerous international conferences, conduct multiple conference calls to align with international time zones, and we have a multi-lingual staff. We also actively engage with around 50 financial journalists across the globe.
Galaxy is one of the few Hong Kong-listed companies to report quarterly financial information. What was the thinking behind the decision to release this information?
Hong Kong reporting requirements are for annual and half-year results only. Galaxy voluntarily provides quarterly financial performance updates to ensure our investors are better informed about our financial performance and our progress toward achieving our business objectives. The response from our investors to this practice has been very positive. We believe global best practice is to deliver accurate, timely and transparent information to the public; this allows investors to make informed decisions.
Is the company setting an example for investor communications in any other way?
Our IR and investor communications are extremely active. Since the opening of Galaxy Macau on May 15, 2011, we have provided investor tours of the resort to more than 600 investors from around the globe.
The release of price-sensitive information is timed to ensure it does not occur on a public holiday in any major financial jurisdiction – we want investors to be able to easily access our information, and able to act on that information if they wish to do so.
Our multiple conference calls also allow global investors to ask questions of management without having to dial into a late night or early morning call.
Is there any downside to you being the deputy chairman and majority shareholder?
It brings a focused attention to the business. While I do receive a salary, the vast majority of my family’s wealth is invested in Galaxy and this investment exceeds $5 bn, clearly aligning my interests with those of shareholders.
During your career, you have been involved in quarrying, construction, hotels and casinos. Which brings you the most satisfaction?
My father instilled a competitive spirit in me, so all my business experiences have been both challenging and rewarding. But by far the most challenging and rewarding has been the casino business.
In 2004 when we opened our first boutique casino with only 40 tables, we were competing against the best and biggest branded casino operators in the world. Today we have emerged as the second-largest casino operator in Macau, which is the world’s largest gaming market. More importantly, we have a significant development pipeline and the opportunity for substantially more growth.
CSR seems to be a prominent feature of all of your companies. Where does this commitment to CSR come from?
It has always played a large role in my life. From when I was very young my father has stressed the importance of giving back to the community. Through his teachings and my own experience as an executive director, I learned the success of our corporation is only possible with the support of the community.
For this reason, I have always stressed the importance of CSR within each of our companies. I strongly believe our commitment to CSR is a huge contributor to our corporate success. Our CSR approach is spread across four categories: responsible gaming, environmental sustainability, employee engagement and charity work.
What distinguishes Galaxy from the other five casino operators in Macau?
When entering the gaming industry, we took an innovative approach. Rather than copying the classic western-style casinos, we sought to design a product that appealed to Asian tastes.
For example, when developing Galaxy Macau we focused on a truly Asian design: our tall buildings are gold in color, representing luck, wealth and fortune in Chinese culture. Instead of partnering with western hotel brands, we partnered with two premier Asian hotel operators, Banyan Tree Resorts and Okura hotels. That way, we created a competitive advantage by developing Macau’s first ‘Asia-centric’ resort.
The opening of the Galaxy Macau reportedly propelled the company to number two by market share of total revenues. Can Galaxy continue to win market share, and make it to number one?
We have always said our focus is on driving profitable volume and not chasing market share. But Galaxy’s market share has increased significantly since the opening of Galaxy Macau, from 9 percent to 20 percent. We believe this strong start is just the beginning and the success will continue.
Prior to the year-end, we will increase our hotel room capacity from 1,400 to 2,200, which will obviously allow more guests to stay at Galaxy Macau. Soon we will open Macau’s first modern cineplex and the exclusive Alan Chan-designed private members’ club, China Rouge. We look forward to even greater success when we are operating at full capacity.
What is your message for shareholders ahead of the expiry of the Macau gaming concessions in 2020?
The gaming and entertainment industry is the primary driver of the Macau economy. As long as we develop in accordance with the government’s goals and needs to diversify the economy, we are confident it will continue to support the sustainable development and growth of the industry. We believe the government will be pragmatic about licence renewal and will make the right decision to ensure the healthy and stable growth of the Macau economy.
This article appeared in the October print edition of IR magazine.
