Could Stanley's Ho's family misfortunes add up to big profits for city's traders?

In this trading-obsessed town, almost anyone with a stockbroking account has to be asking: should I buy SJM Holdings?

Since January 25, when 89-year-old Macau casino billionaire Stanley Ho Hung-sun accused five of his 17 children and two of his four wives of 'fraudulently misappropriating' the private company that controls most of his wealth, SJM's shares have fallen 5 per cent. They could slip further as the battle for control intensifies. And the stock is already cheap compared with SJM's Macau rivals.

'A scandal presents an opportunity for assets to be mispriced,' said Thomas Holland, a Hong Kong-based partner of US$1 billion hedge fund Cube Capital.

SJM, founded in 2002 as Ho's licensed casino operator after he lost his four-decade monopoly on gambling in Macau, is in rude financial health.

The firm, which controls 20 of Macau's 33 casinos including the Grand Lisboa, booked more casino revenue than the Las Vegas Strip in the first six months of last year. Yet its shares, at HK$13, are trading at 13.5 times forecast earnings for 2011. SJM's rival Macau casino operators - Sands China, Wynn Macau, Galaxy Entertainment and Melco International - are valued at between 18 and 25 times expected earnings.

JP Morgan expects SJM, valued at HK$71 billion, to report HK$10 billion of net cash and a 296 per cent increase in net profits, to HK$3.6 billion, for 2010.