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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (5196)	7/25/2005 3:00:19 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

[How could Chinese gov. be this stupid? Need JV in lottery business??? This is a guaranteed high profit business!]--"Tabcorp venture wins lottery in China" By Colin Kruger Sydney July 26, 2005 Tabcorp has taken its first significant step into Asia, announcing that its Keno lottery joint-venture had won a deal in China that is expected to generate about $50 million a year for Tabcorp within five years. Tabcorp said its venture with Hong Kong-listed World Metal Holdings signed a 10-year technology and services agreement with Beijing Lottery Online Technology. Beijing Lottery, partly owned by the Ministry of Welfare, is exclusively licensed to operate and run lottery products on the nationwide Instant Lottery Sales System. Tabcorp said this was the first time a foreign company had been invited to participate at a nationwide level in the People's Republic of China's lottery market. The deal follows nine months of negotiations that pitted Tabcorp and World Metal against two US rivals. "This agreement is the first step in Tabcorp's international strategy to build long-term relationships and provide exciting leisure and entertainment products in China," Tabcorp chief executive Matthew Slatter said. AdvertisementAdvertisement The partners will provide Beijing Lottery with software, equipment and technical services over the life of the contract. At least 60,000 Keno terminals would be installed in 30 provinces in the first five years, Tabcorp said. The deal still needs regulator approval. The Tabcorp joint venture will spend $150 million over the first five years of the contract, with Tabcorp's contribution expected to be roughly in line with its 67 per cent share of the operation. The venture was expected to generate around $100 million in revenues annually by year five, with Tabcorp's net earnings from the operation forecast to reach $50 million by that stage, the company said. Goldman Sachs JB Were said that a $50 million net profit contribution by 2009-10 would add about 6 per cent to Tabcorp's earnings, relative to the broker's current forecasts. "This may not seem significant given it is unlikely to make a material contribution until 2007-08 or so, but we would expect Tabcorp's forecasts to be fairly conservative. "In addition it does add a growth option that we (and the market) have not ascribed any value for," Goldman said. The announcement failed to impress the markets. Tabcorp shares dropped 6¢ to close at $15.85. Several gambling operators have looked abroad to escape slowing growth in Australia. Tabcorp plans to build one of two resort casinos in Singapore. Kerry Packer's Publishing & Broadcasting Ltd is also believed to be on the hunt in Asia for lucrative possibilities through its joint venture with Stanley Ho's Melco International. theage.com.au