Kangwon Land Inc, the operator of the only casino resort in South Korea where the country’s nationals are allowed to gamble, reported net income of KRW123.7 billion (US$110.1 million) for the second quarter of 2016, up by 27.1 percent from the prior-year period.
Revenue from sales increased by 5.9 percent year-on-year to KRW411.8 billion in the three months to June 30, the company said in a filing to the Korea Exchange on Friday.
Daiwa Securities Group Inc analyst Thomas Kwon said Kangwon Land’s second quarter results were weaker than expected “on a fall in VIP gamer traffic and hold ratio”.
According to Daiwa’s note, the growth in sales was supported by “solid revenue from mass-table games (+5.5 percent year-on-year) and slot machines (+11.6 percent year-on-year)”. Revenue from high rollers however “fell by 2.7 percent year-on-year as … there might be a transition in visitor profile and gamer population,” said Mr Kwon.
The brokerage estimated that the hold ratio at Kangwon Land casino slipped to 22.9 percent for the second quarter of 2016, down from 23.2 percent from the prior-year period. Daiwa said that VIP gambling accounted for 16 percent of the revenue mix in the quarter, while mass tables and slot machines accounted, respectively, for 45 percent and 36 percent. The remaining 3 percent were derived from non-gaming services, it added.
Operating income for the period grew by 8.4 percent to KRW160.3 billion, Kangwon Land reported.
For the six months to June 30, the casino operator reported accumulated net income of KRW266.5 billion, up by 16 percent from the prior-year period.
“For the second half of 2016, we expect the company to show solid revenue and earnings growth, mainly driven by the growing number of casual gamers for mass-table games and new slot machines, and its disciplined cost strategy,” said Daiwa’s Mr Kwon.
South Korea currently has 17 casinos, but the country’s nationals are only allowed to gamble at Kangwon Land casino resort (pictured) in an upland area of Kangwon province – 150 kilometres (93 miles) from the country’s capital Seoul.
South Korea’s state auditor has recently urged the country’s government to introduce tighter rules to curb gambling addiction that affects some South Korean nationals visiting the Kangwon Land casino resort, reported last week South Korean news agency Yonhap.
A study conducted by the Board of Audit and Inspection found that a total of 2,165 South Koreans had visited the Kangwon Land casino with a frequency amounting to more than 100 days in a 12-month period up to March.
The watchdog added – according to the Yonhap report – that regulations in South Korea regarding the entry of locals in casinos were loose compared to other jurisdictions, like Singapore.
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Credit rating agency Fitch Ratings