Shares of 13 Holdings Down 80 Percent in 2017 as Founder Seeks Cash to Finish Macau Resort

Posted on: October 23, 2017, 07:00h. 

Last updated on: October 24, 2017, 01:42h.

Shares of 13 Holdings traded on the Hong Kong Stock Exchange have lost 80 percent of their value in 2017, as the company’s marquee project, the ultra-modern Macau luxury resort The 13, remains unfinished and underfunded.

13 Holdings Stephen Hung Macau
You might think a man that owns 30 red Rolls-Royces hasn’t a care in the world, but Stephen Hung’s 13 Holdings company is nearly worthless. (Image: Rolls-Royce)

Flamboyant businessman Stephen Hung, a former Merrill Lynch executive, banker, and the founder of 13 Holdings, announced in a securities filing late last week that the company is raising HK$1 billion ($128 million) in order to complete the $1.6 billion resort. The 200 all-villa room hotel is expected to open in March 2018, according to the financial disclosure.

The revelation that Hung still doesn’t have enough money to finish his excessively extravagant property sent shareholders running. 13 Holdings plummeted 49 percent on Friday, which equates to a company valuation loss of about $55 million.

Year to date, 13 Holdings has lost 80 cents of every dollar it was worth prior to 2017. A share of the company is now selling for 0.46HKD, or $0.06.

Big Gamble, Without Gambling

Macau has drastically changed in the three years since Hung brought on investors to build The 13, but his resort’s blueprint has not.As China cracked down on VIP junkets bringing the mainland’s elite to Macau, a decline in VIP gaming devastated the city.

In the financial filing last week, The 13 confirmed it will open as a non-casino hotel.

“The company would like to reiterate that although it is the company’s intention to include gaming operation in The 13 Hotel, it is subject to, among other things, the entering into a formal agreement between the company and the licensed operator, and the approval of the Macau government, and as such, gaming operation may or may not commence at The 13 Hotel,” the company explained.

To offer gaming, The 13 would need to partner with one of Macau’s six licensed operators. Last week, Macau Secretary for Economy and Finance Lionel Leong said he is unaware whether the property is in talks with an approved entity, but explained that the city’s gaming regulator had not received a casino application.

Sparing No Expense Might Cost Hung

Frugal is not found in Hung’s dictionary. The resort is an homage to Louis XIII’s opulent baroque tastes, so much that Hung even tracked down and hired a direct descendant of the king to oversee the implementation of French luxury. Hung also purchased 30 Rolls-Royce Phantoms to serve as shuttles for guests at a cost of $20 million.

The 13 is located in a secluded corner in the Coloane Village south of the main Cotai Strip drag.

The project was developed in 2014 at the height of the Macau VIP casino industry. Base rates for a villa are expected to go for $1,500 a night, whereas five-star luxury properties on the Cotai Strip can be had for just $100 to $200 a night during non-holidays.

The probable guest at The 13 is the ultra-VIP who is arriving via first-class travel arranged by a junket company. But those persons primarily venture to Macau to play high stakes baccarat. Without a casino, it might be difficult to get that clientele to stay well south of the action in Coloane, regardless of the Rolls-Royce Phantoms.