KARAMBUNAI CORP BHD (KBUNAI, 3115) is a listed company control by Ultra Rich Papa - Tan Sri Dr Chen Lip Keong.
Tan Sri Dr Chen Lip Keong is Malaysia 7th richest man with net worth USD4.3 Billion (RM17.8 Billion).
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KBUNAI sharep price closed at 5 years high today. What trigger the buying interest in KBUNAI ? Maybe because KBUNAI got an Ultra Rich Papa !!!
Tan Sri Dr Chen Lip Keong is Malaysia 7th richest man with net worth USD4.3 Billion (RM17.8 Billion).
Tan Sri Dr Chen Lip Keong is Malaysia 7th richest man with net worth USD4.3 Billion (RM17.8 Billion).
Malaysia's Richest 2018: How 'Accidental' Casino Billionaire Chen Lip Keong's Cambodia Bet Paid Off
This story appears in the March 2018 issue of Forbes Asia. Subscribe to Forbes Asia
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This story is part of Forbes' coverage of Malaysia’s Richest 2018. See the full coverage here.
When
Chen Lip Keong won Cambodia's first casino license in 1994, he had
hardly ever stepped inside a casino. He'd been to Malaysia's Genting
Highlands once on a date in the 1970s and visited Las Vegas once as a
tourist. Casinos are "not in my blood; I'm not a gambler," he says. Yet
today, renowned casino architect Paul Steelman calls Chen "one of the most powerful creators of these properties in the world."
This
self-proclaimed "accidental" gambling billionaire is the chief
executive and majority shareholder of NagaCorp. Its NagaWorld
casino-resort complex in the capital Phnom Penh boasts 1,700 guest
rooms, 600 gaming tables and more than 5,000 gaming machines. Despite
his gambling aversion, he bet $369 million of his own money to build Naga2, an opulent twin-tower extension opened in November that
features nine floors of guest rooms for high rollers with adjoining
private gaming rooms. And soon there'll be a 2,200-seat theater where
Chen is aiming to host the likes of Lady Gaga, a favorite of his. The
addition makes Cambodia and NagaWorld first-rank contenders in Asia's
$51 billion casino market.
Along
the way this native of Malaysia has helped Cambodia recover from
decades of upheaval. The country's gross domestic product has grown by
7.5% a year since 1994, putting it among the world's top performers.
Only 118,163 people visited the country in 1993, according to the
ministry of tourism; that figure topped 5.6 million last year, with 7
million expected by 2020. Tourism accounted for more than 12% of Cambodia's GDP last year -- and Naga has claimed a hand in 25% of it.
Amid
the rising tide of tourists, Naga is booming. Last year net profits
soared 23%, to $255 million, on an 80% jump in revenue, to $956 million.
VIP roll -- or losing bets -- more than doubled, to $21.1 billion,
accelerating after the launch of Naga2. NagaCorp's $4 billion market
capitalization represents an 11-fold appreciation since it listed in
Hong Kong in 2006, and it consistently outperforms other gambling
stocks. "We're antigravity," says Chen.
Naga
benefits from Cambodia's low labor costs and Chen's tight controls on
capital expenditures. Naga says it spent $1.5 billion building the
complex that commercial real estate specialist Colliers International
now values at $5.4 billion. And, as he loves pointing out, Naga has no
debt. All this is boosting his fortune -- he's worth $3.3 billion, up
from $1.6 billion a year ago.
Now
70, Chen is casting his net wider. He's building a casino in Russia's
far east, and he's eyeing hotel and casino projects in Australia,
Mongolia and Kazakhstan. Then
there's a Borneo resort that's the keystone of a multibillion-dollar
Malaysian government eco-tourism master plan to be led by his Kuala
Lumpur-listed companies Karambunai and Petaling Tin. "I am in the springtime of my business career," he says.
A chance start
Chen
grew up in the Kinta Valley tin-mining area, a second-generation member
of an immigrant family from China. He trained as a medical doctor at
the University of Malaysia and practiced briefly as a general
practitioner, but felt that his real calling was business. So he decided
to go into property development and for a time also ran an
aviation-parts company, producing components for Malaysia's
government-backed attempt to produce planes.
In
the 1980s, Malaysia Prime Minister Mahathir Mohamad launched his policy
of Prosper Thy Neighbor -- not beggar thy neighbor -- to encourage the
country's predominantly Chinese business community to seek out what Chen
calls "win-win" situations in other Southeast Asian countries. Cambodia
was among the neediest -- Khmer Rouge rule in the late 1970s left an
estimated two million people dead out of a population of eight million.
Vietnamese troops overthrew the communist regime in 1979, but fighting
persisted into the 1990s.
Chen,
now wealthy, arrived in the early 1990s. He saw Cambodia as a place
where he would have to dig for opportunities, "a fish pond without
fish," and planned to explore for oil in the Gulf of Siam. But following
UN-supervised elections in 1993, the new government tendered a casino
license. "It's not the business I chose, I planned or I envisioned," he
says. But he viewed hospitality as a way to combine property development
and a steady cash flow, and his company won the bid. "Gambling is a
means to achieve a certain purpose and that purpose is tourism," he
says.
Naga launched casino operations on a leased barge on the Bassac
River near Phnom Penh's Royal Palace in 1995. In 2000, Naga bought land
near the barge dock and began building NagaWorld, and the casino moved
onshore in 2003. Situated across a boulevard, Naga2 connects to the
original via NagaCity Walk, a 3,800-square-meter underground shopping
mall. "We try not to build monuments: We build jobs and contribute to socioeconomic development," says Chen. "We
have contributed to tourism growth, raised the international investment
profile, attracted FDI [foreign direct investment] and are the biggest
taxpayer in the country."
Win-win situation
Chen, who now spends two thirds of his time in Phnom Penh and most
of the rest in Kuala Lumpur, has certainly found a win-win situation
with the Cambodian government. Naga's casino license is good for 70
years and includes a 40-year monopoly in Phnom Penh and everywhere else
within 200 kilometers. "On the same hill you cannot have two tigers," he
says, quoting a Chinese aphorism. The 70-year term is well beyond
Macau's 20 years, but in many jurisdictions, including Nevada and parts
of Australia, licenses never expire; they're valid as long as licensees
follow the rules and pay their fees.
The favorable conditions extend to taxes. Naga is exempt from
Cambodia's 20% corporate-profits tax, and there's no gaming tax.
Instead, it makes payments to the government that last year amounted to
$8.12 million, only 3.2% of operating profits. The part of that payment
based on gaming rises 12.5% a year but was equivalent to only 0.6% of
gaming revenue last year, a fraction of the gaming taxes levied
elsewhere in the region. Macau charges a 35% gaming tax, and fees can
add several more percentage points. Singapore takes 5% of VIP gaming
revenue and 15% of mass market revenue, plus a 7% sales tax on both.
Naga made additional payments to the government of $9.4 million in 2015
and $16.6 million in 2016 but hasn't announced an additional payment for
2017.
Naga also funds a wide range of corporate social-responsibility
programs. Naga Academy has taught trade skills and languages to
thousands since 2012. The company guarantees jobs for all graduates, in
its own company or elsewhere in hospitality. In addition, Naga created
the Cambodia Sport Award, sponsors a national league football club and
supports athletes training for international competitions. Chen's son,
Chen Yepern, oversees much of this effort, visiting poor areas of Phnom
Penh or provincial villages on weekends with Naga staff, distributing
medicine, awarding scholarships or planting trees.
Being a good corporate citizen may get a Malaysian casino owner only
so far in Cambodia under the authoritarian regime of Prime Minister Hun
Sen, in power since 1985. But Chen isn't worried. "This country means
business," he says. "If you take away Naga's license, FDI would
collapse. Our agreement with the government is highly visible, so taking
away the license to give it to a third party [would scare] overseas
investors. And the country does not want to chase away foreign
investment. The annual budget depends on it."
Chen says Naga has driven Cambodian efforts to enact a
casino-gambling law that will codify and likely increase government
oversight, and potentially raise tax rates. He expects it to be adopted
before the election scheduled for July 29. "NagaCorp's legal casino
license shall be protected by law as soon as the casino law is
promulgated," he says. "This shows that foreign investors shall be
protected."
Working to improve Cambodia's investment climate
The casino law is the latest phase of Naga's 15-year quest to
improve Cambodia's investment climate. The Singapore stock market
rejected NagaCorp for a listing in 2003 because Cambodia lacked
international-standard casino regulations and anti-money-laundering
laws. Chen realized that to advance, Naga would have to raise Cambodia's
game along with its own.
He approached Timothy McNally, a former FBI agent and prosecutor
brimming with Middle American earnestness, to help get NagaCorp ready to
list in Hong Kong. McNally was wrapping up a stint at the Hong Kong
Jockey Club, which handles $25 billion in bets a year. "I came down here
and I truly didn't expect much," he recalls. "The founder's thinking is
certainly what drew me," particularly the focus on improving
regulation. "He wanted to see the development of the country and
development of the company work in parallel. That struck me as something
worthwhile."
McNally, 70, became NagaCorp's chairman in 2005, and the next year
it became the first gambling company listed in Hong Kong and, says Naga,
the first company principally doing business in Cambodia listed
anywhere. Chen says the $105 million initial public offering wasn't
about international capital as much as international standards.
After the Singapore rejection, NagaCorp hired global security
consultant Hill & Associates to audit its anti-money-laundering
efforts. Twice-yearly inspections became one of the conditions for
Naga's Hong Kong listing. "H&A has discovered no significant lapses
or weaknesses on the part of NagaCorp. Incremental improvements and
adjustments that have been advised by H&A have been undertaken
efficiently," the auditor tells Forbes Asia.
Cambodia may be one of the most corrupt and least transparent
countries in the world, but Chen insists on international best practices
at NagaCorp. It follows a 50-page Code of Conduct & Anti-Corruption
manual that helps it abide by local and foreign laws, such as the U.S.
Foreign Corrupt Practices Act. "We are not a bunch of cowboys," he says.
"We believe in the responsibility that has been given to us as an
operator that we preserve the social sanity, the integrity which the
country deserves."
To raise Cambodia's game, the government adopted international
financial standards, signed the global Financial Action Task Force
protocols and joined its Asia Pacific Group to combat money laundering,
as well as passed national financial-crimes statutes, all at Naga's
urging. Though enforcement is spotty, "the company operates as if it
were in a heavily regulated jurisdiction," says Grant Govertsen,
managing director in Macau for boutique investment bank Union Gaming
Group.
Cambodia's reputation made financing Naga2 difficult. McNally says
international bankers offered $175 million, less than half the amount
needed, at 16% interest, four times the then-U.S. prime rate. So Chen
funded construction himself through a convertible-bond arrangement with
the company. The conversion, finalized last August, gives him 65% of
NagaCorp.
Doubling down on China
These days Naga is doubling down on the China market, supplementing
its Southeast Asian base. It's declaring itself "China ready" with more
Mandarin-speaking staff, a lavish Cantonese restaurant in Naga2 and more
deals with Macau's mainland-focused junket promoters. Naga has raised
betting limits at VIP tables through revenue-sharing arrangements with
junkets, spreading the risk.
For the mass market, the source of most of NagaWorld's profits, main
floor baccarat bets start at a pricey $100 for so-called "squeeze
games" in which players can handle their cards themselves. To recruit
this crowd the company engaged state-run China International Travel
Service to market tours to second-tier cities Changsha, Hangzhou, Xi'an
and Qingdao, flying via Naga-affiliate Bassaka Air's three-times-weekly
service. Bassaka also flies daily to Siem Reap, site of the Angkor Wat
complex often included in tour itineraries, and twice weekly to Macau.
CITS subsidiary China Duty-Free Group is NagaCity Walk's anchor tenant.
"With the wave of consumerism in China -- a lot of energy there, and we
are on the doorstep of China -- we can squeeze a lot out of China," says
Chen.
He says he envisions Naga -- a pan-Asian term for dragon --
encircling China with gambling and non-gambling resorts, utilizing its
frontier-market skills honed in Cambodia. It's broken ground for a
casino hotel outside Vladivostok, and at last September's Eastern
Economic Forum, Chen lobbied Russian President Vladimir Putin to "punch
through" a railway to Vladivostok from Harbin in northeastern China, the
casino's target market. There's no word on whether Putin is on board.
Naga has met with government officials about developing hotels in
Mongolia and Kazakhstan. And it's intrigued by the casino-resort license
offered in Australia's far northern Queensland near Cairns, where Chen
envisions a 1,700-kilometer (1,056-mile) rail link from Brisbane. But
closer to home, NagaWorld remains focused on the 650 million people in
Southeast Asia, and executives are already talking about Naga3. Chen may
never have intended to become a casino mogul but NagaCorp's success is
no accident.
KBUNAI sharep price closed at 5 years high today. What trigger the buying interest in KBUNAI ? Maybe because KBUNAI got an Ultra Rich Papa !!!
Tan Sri Dr Chen Lip Keong is Malaysia 7th richest man with net worth USD4.3 Billion (RM17.8 Billion).
https://klse.i3investor.com/blogs/pennystocks/191391.jsp
