GGRAsia – Narrow to think S.Korea casinos rely on Chinese: broker

Narrow to think S.Korea casinos rely on Chinese: broker

Jul 03, 2023 Newsdesk Latest News, Rest of Asia, Top of the deck

Investors in South Korea’s gaming sector seem to be “maintaining a narrow view that foreigner-only casinos [in the country] depend predominantly on Chinese visitors”, not valuing the fact there has been “rapid recovery in inbound traffic” from other countries, says Shinhan Securities Co Ltd. The brokerage suggested that, for “sentiment to improve the casinos will need to prove investors wrong with reports of solid earnings”.

Analyst Ji InHae wrote in a note published on Sunday by media outlet BusinessKorea: “Despite rapid growth in table drop from visitors from countries other than China, investor sentiment continued to sway on China’s stimulus delays, relatively slow recovery in Chinese inbound traffic, as well as political issues arising from the start of the year.”

Visitor volume to South Korea from Japan and China recovered in May this year to 64 percent and 26 percent respectively of pre-pandemic levels, noted the memo from Shinhan Securities, giving commentary on the nation’s casino industry.

It added: “Chinese inbound traffic has started to improve, but the pace of recovery is falling short of market expectations.”

Japanese and Chinese tourists have been mentioned previously by the country’s casino sector as being important to gambling earnings.

Japan continues to be the biggest source of South Korea’s inbound foreign visitors so far in 2023, based on the latest data up to May 31, reported last week Yonhap News Agency.

South Korea has 17 casinos, but only Kangwon Land, in a remote upland area, is permitted to cater to local players.

“May sales hinged on hold percentage,” with Paradise Co Ltd, an operator of some foreigner-only casinos, “reporting sales of KRW70.1 billion [US$53.6 million], the second highest on record, thanks to significant improvement in hold percentage,” wrote analyst Ji.

The commentary added, referring to Grand Korea Leisure Co Ltd, a foreigner-only casino operator that is controlled by the Korea Tourism Organization: “In contrast, Grand Korea Leisure’s hold percentage reversed solid gains seen over the past three months, causing sales to plunge month-on-month to KRW25.3 billion in May.”

The institution defined casino ‘hold’ as an operator’s ‘win’ relative to the amount of customer ‘drop’ – the amount of money deposited at the table for making bets.