Tony Fung says still ‘committed’ to Aquis project

There had been speculation in the Australian media – following the formation in February of a minority state government by the left-of-centre Labor Party – that local political enthusiasm for Aquis Great Barrier Reef Resort– and for an unconnected casino resort initiative at Queen’s Wharf in the state capital Brisbane, might wane.

But Mr Fung said in his latest letter to the local community: “We have been very encouraged with our interactions with the new Queensland government and their attitude to investment has been one of the drivers of our desire to further invest in the state.”

He added: “Our team continues to hold positive, productive negotiations with the government and we will hopefully be able to announce some further developments shortly.”

Queensland is Australia’s most indebted state government. According to the state budget for 2014-15, published in November 2014, its debt at that time stood at AUD80 billion (US$59.9 billion) with an annual interest bill of AUD4 billion. New casino resorts were championed by the previous Liberal state administration as helpful economic initiatives.

Mr Fung’s latest letter didn’t mention a budget for the Aquis scheme. In statements in 2014, Mr Fung’s side had spoken of spending as much as AUD8.15 billion. That led some investment analysts to assume that, with returns on invested capital likely below those recently seen in Macau, the project would need to attract significant numbers of Chinese and other high rollers in order to achieve timely payback.

In a presentation in Macau in January, Aaron Fischer, regional head of consumer and gaming research for brokerage CLSA Ltd, said that – even with the recent slowdown in Chinese gambling spend seen in Macau – capital returns on new Macau casino projects were likely to remain three times higher than for similar schemes in the U.S. and other markets outside the Asia Pacific region.

Japanese finance house Nomura suggested in a note in late January that the return on invested capital (ROIC) on new Macau projects could decline to 15 percent per year from 25 percent, because of the downturn in gambling by Chinese patrons. That has been linked by analysts to the mainland’s anti corruption campaign and other market cooling measures.

The Aquis Resort at The Great Barrier Reef Pty Ltd – the proponent of the Cairns plan – is wholly and solely owned by Mr Fung, a Hong Kong resident and “long term investor in Queensland”, according to a submission the developer made to the state government in July 2013.

In December, it was announced that an entity linked to Mr Fung and referred to as Aquis Group had completed the AUD6-million acquisition of Casino Canberra from Casinos Austria International Ltd, after gaining approval from the Australian Capital Territory (ACT) government.

The businessman – a former chairman of Hong Kong-based financial services company Sun Hung Kai and Co Ltd – referred in his latest open letter to a plan to list Casino Canberra on the Australian Securities Exchange.

In February, the Canberra-based professional rugby union team ACT Brumbies announced a six-year shirt sponsorship seal with Aquis worth AUD8 million.

In an open letter to Cairns residents in November last year, Mr Fung said he was putting the Aquis scheme under “review” because of then delays in his attempt to take over an existing casino property in Cairns. A few days later he issued another open letter saying despite “increasing complexity and difficulty” he remained committed to the Aquis plan.