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 approximately KRW90.45 billion (US$71.1 million) for the first quarter of 2018, down by 30.3 percent from the prior-year period.
Revenue from sales declined by 7.5 percent year-on-year to KRW378.41 billion in the three months to March 31, the company said in a filing to the Korea Exchange on Thursday.
Operating income for the three-month period declined by 22.4 percent year-on-year to KRW126.0 billion, Kangwon Land reported.
South Korea currently has close to 20 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.
Brokerage JP Morgan Securities (Asia Pacific) Ltd said in a Friday note that Kangwon Land’s first quarter results “were again weak”, continuing “to reflect challenging business environments” for the firm.
The brokerage had said in an August 2017 note that Kangwon Land had been under political pressure to moderate the growth of its revenue. The very existence of a casino that allows South Koreans to gamble on home soil is a hotly debated topic in that country.
“Worse yet, the planned opening of a waterpark in July will most likely add cost pressures to second half and 2019 earnings,” JP Morgan analysts DS Kim and Sean Zhuang wrote in their Friday note.
They added that gross gaming revenue at Kangwon Land in the first quarter this year declined by 8 percent year-on-year to about KRW364 billion. “VIP was particularly weak (-22 percent year-on-year to its four-year-lows), which Kangwon Land attributes to poor underlying demand.”
JP Morgan said the decline in VIP demand was “probably due to recent media scrutiny on Kangwon Land amid [a] labour scandal, as high-rollers typically stay low-key to avoid any attention.”
That was understood to be a reference to a decision by South Korea’s president to order the sacking of 226 employees of Kangwon Land following a probe that suggested that they had got their jobs via unfair means, as reported by Yonhap news agency in March.
Meanwhile Kangwon Land has also slimmed its daily opening hours since April 1, following an order of the South Korean government. The casino at the property now opens to the public from 10am to 4am of the following day. The casino at Kangwon Land previously operated from 10am to 6am of the following day.
Kangwon Land was also ordered to reduce the number of mass tables, from a maximum 180 to a maximum 160, starting January 1, 2018.
