Grand Korea Leisure Co Ltd (GKL) saw its net income rise 22.9 percent year-on-year to KRW27.75 billion (US$24.3 million) in the third quarter of 2016.
Revenue for the period was up 20.5 percent from the prior-year period, to KRW134.04 billion, the firm said in a filing to the Korea Exchange on Friday.
GKL – a subsidiary of the Korea Tourism Organization, which is an affiliated body of South Korea’s Ministry of Culture, Sports and Tourism – operates three foreigner-only casinos in South Korea under the Seven Luck brand.
The casino company’s operating income in the three months to September 30 rose 30.4 percent from the year-ago period, to approximately KRW34.53 billion.
GKL had a better trading quarter in the three months to September 30 compared to the prior-year period – at that time it saw its net income fall 41.5 percent. Casino operators in South Korea were negatively affected last year because of a public health emergency in the country due to an outbreak of Middle East Respiratory Syndrome (MERS), which severely dented inbound tourism to South Korea.
For the first nine months of 2016, GKL recorded net income of nearly KRW80.20 billion, up 9.4 percent from a year earlier. Revenue for the period grew by 4.5 percent year-on-year to KRW399.61 billion, while operating profit increased 11.7 percent to KRW108.05 billion, the firm said.
“GKL reported strong visitor traffic from Japan and China, but higher labour and compliment costs. Management expects GKL’s visible and stable earnings growth to continue, supported by an increase in casual gamers from the Asia region and VIP gamers from Japan,” said brokerage Daiwa Securities Group Inc in a Friday note.
“GKL aims to diversify the gamer mix into non-Chinese gamers, while expanding casino floors at existing sites in Seoul and Busan and ramping up the utilisation rate of casino tables. We expect the company to try to attract more mass-table gamers and casual game players in Asia,” said Daiwa analyst Thomas Kwon.
The stock of GKL – and that of Paradise Co, a rival in South Korea’s foreigner-only casino sector – saw some volatility last week amid media reports that the authorities in China might curb the level of outbound tourism to South Korea.
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”Given that the blanket casino closure [in Macau due to Typhoon Mangkhut] happened on an all-important weekend day… we expect that somewhere between MOP1.1 billion [US$136.2 million] and MOP1.5 billion in GGR will be lost”
Analyst at Union Gaming Securities Asia