Paradise Co Ltd expects to break ground on its Incheon project next month, according to a note from investment bank Daiwa Capital Markets.
Last year, Paradise – currently South Korea’s biggest casino operator with five properties – said it was linking with Japan’s Sega Sammy Holdings Inc for a US$1.7-billion scheme at Yeongjong Island, in the Incheon Free Economic Zone. The development, called Paradise City (pictured in an artist’s rendering), is scheduled to open in 2017.
The project includes hotels and restaurants, and – as local law currently stands – a foreigners-only casino. According to statements by Paradise, the resort will be a 15-minute walk from the Incheon International Airport, the largest airport in South Korea and serving the country’s capital, Seoul.
Currently, only Kangwon Land – a difficult-to-access casino resort 150 kilometres (93 miles) southeast of Seoul in Kangwon province – is open to locals.
Daiwa’s note quoted Paradise chief executive Lee Hyuk-byung as saying that the company plans to start construction of the first phase of the scheme in November. Previous reports stated that the company was planning to kick off construction already this month.
The casino resort will have 160 gaming tables, 340 slot machines and 750 hotel rooms, Daiwa analysts Thomas Kwon and Mark Kwon wrote after accompanying Mr Lee to meet investors in the U.S. and Canada between October 20 and 23.
According to the two analysts, Paradise’s CEO expects the new property to generate annual revenue of KRW400 billion (US$381 million) by 2018, with 25 percent coming from non-gaming activities. He reportedly added that the property would deliver 25-percent earnings before interest, taxation, depreciation and amortisation (EBITDA) margin in 2018. The margin should improve to 35 percent in 2025 on the back of increasing revenue from the mass gaming market.
In July, GGRAsia reported that another Incheon project involving U.S.-based Caesars Entertainment Corp was expected to break ground next year, with phase one likely to open in 2018.
But Paradise City may face even more competitors. The South Korean government’s master plan for new international-standard casino resorts is likely to include up to three more licences for the Incheon area, according to a report from Standard Chartered Equity Research. The casino industry has anticipated the master plan will be published by the end of this year.
Daiwa’s note also mentioned plans by Paradise to expand the casino floor area in its existing casino portfolio.
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