GKL flags tough 2017 as rival S. Korea casino readies: Daiwa

Feb 13, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck  

---

South Korean casino operator Grand Korea Leisure Co Ltd (GKL) expects a “tough business environment” in 2017, mainly due to the expected opening of market rival Paradise Co Ltd’s Incheon resort, Paradise City, in the second quarter, and GKL’s “continued difficulties in promoting its casino services to Chinese high rollers,” said a Friday note from Daiwa Securities Group Inc, citing commentary by company management.

On the previous day GKL – which operates three foreigner-only casinos under the Seven Luck brand, including one at Gangnam (pictured) in the South Korean capital Seoul – had announced an 85-percent year-on-year increase in net income for the fourth quarter of 2016.

“GKL reported stronger-than-expected fourth-quarter results, thanks to a higher-than-expected hold ratio at all of its three casino sites in Korea, especially at the Seoul Gangnam casino,” said Daiwa analyst Thomas Kwon.

“In our view, GKL has succeeded in attracting premium mass gamers from the region and nicely offsetting a decline in VIP gamers from China,” added the analyst, referring to the fourth quarter.

But he noted the firm was giving guidance it anticipated 2017 casino sales to be KRW530 billion (US$460.1 million), slightly lower than in 2016, “as it expects intensifying competition with Paradise City from second quarter 2017”.

Mr Kwon added: “Strategically, we believe GKL will increase its table utilisation rate for existing capacity, with more premium mass from Japan, local, and other regions, while benefiting from incoming casino visitors to Paradise City in Korea over the medium term.”

Daiwa said GKL had given guidance for 2017 dividend per share of KRW870 – or a dividend yield of 4.4 percent based on the closing price of KRW19,750 on February 9 – the same as the 2016 dividend per share.

---

---