South Korean casino operator Grand Korea Leisure Co Ltd (GKL) will “find it hard to hit its business target for 2016 due to a slower-than-expected recovery in visitor traffic and drop,” said a note from analyst Thomas Kwon of Daiwa Securities Group Inc.
Nonetheless the brokerage expects GKL to post a 7 percent increase in revenue judged year-on-year for full year 2016, and expects its operating profit to rise 19.6 percent compared to 2015.
GKL operates three foreigner-only casinos – two in the capital Seoul and one in the southern port city of Busan – under the Seven Luck brand.
During 2015, the Korea Exchange-listed firm reported that 1.6 million visitors attended its properties, generating total casino drop of KRW4.17 trillion (US$3.6 billion).
The casino group told investment analysts in a recent briefing – as reported by Daiwa – that during the third quarter it experienced an 11-percent year-on-year increase in total visitors to its properties and a 14.8-percent year-on-year rise in the number of VIP gamblers.
Guidance from the firm was that the latter number was based on “a solid recovery in high rollers from Japan and China,” said Mr Kwon.
GKL will report its third-quarter results on November 4.
“GKL has a casino-sales target of KRW560 billion (up 13 percent year-on-year) for 2016, on a solid recovery in Chinese VIP traffic and robust operating leverage,” wrote Mr Kwon.
But he added: “We believe it [the company’s operations forecast] should reflect the effect of a slow recovery in traffic from China and costs relating to casino remodelling over 2016-17.”
The stock of GKL and that of one of its market rivals, Paradise Co Ltd – which operates four foreigner-only casinos in South Korea – saw some volatility this week amid media reports that the authorities in China might curb the level of outbound tourism to South Korea.
In August 2015, China News Service reported that mainland China’s Ministry of Public Security had started an operation called “Chain Break”, linked to tourism to South Korea by well-heeled Chinese. It was said to be aimed at disrupting foreign casinos’ access to money flows from China and those casinos’ links to individuals that scout for gamblers from China.
Mr Kwon said in his Wednesday note: “At our recent visit to a GKL casino in Busan, we learned the company is pursuing more balanced business strategies, where it aims to diversify the gamer mix into non-Chinese gamers, expand casino floors at the existing sites in Seoul and Busan, and ramp up the utilisation rate of casino tables.”
Dec 13, 2018A new research report spells out just how much overhang exists between the typically 25-year casino land leases held by Macau’s six casino licensees and the expiry dates – either in 2020 or 2022...
Dec 13, 2018
Dec 13, 2018
"The MSAR [Macau Special Administrative Region] Government is always maintaining its policy not to have imported labour to work as dealers. This position has not changed"
Lionel Leong Vai Tac
Macau’s Secretary for Economy and Finance