GGRAsia – S. Korean casino op GKL profit down in first quarter

S. Korean casino op GKL profit down in first quarter

May 14, 2018 Newsdesk Latest News, Rest of Asia, Top of the deck

South Korean casino operator Grand Korea Leisure Co Ltd (GKL) said its first-quarter net income fell by 1 percent year-on-year to approximately KRW17.35 billion (US$16.26 million).

The firm however said its net income increased by 22.2 percent when compared the fourth quarter of 2017, which stood at KRW14.20 billion.

Aggregate revenue for the first three months of 2018 stood at KRW121.93 billion, down 2.7 percent from the prior-year period. The firm’s operating income in the period was KRW31.39 billion, representing a 0.3 percent year-on-year decrease.

The firm did not give commentary on the quarterly results filed with the Korea Exchange on Friday.

Brokerage JP Morgan Securities (Asia Pacific) Ltd said in a Friday note that GKL’s first quarter gaming metrics were “lacklustre, as expected”.

“Drop fell 16 percent year-on-year and 7 percent quarter-on-quarter to a 2.5-year low, as GKL continued to lose share to its rival Paradise [Co] after the Paradise City opening,” wrote analysts DS Kim and Sean Zhuang.

“By segment, VIP remained a drag (-25 percent year-on-year) with weaknesses across all nationalities (China -42 percent year-on-year, Japan -14 percent, others -11 percent), while mass drop fared much better and grew 8 percent year-on-year,” they added.

The brokerage however said that GKL’s first-quarter results were “not bad”.

“Stronger margin was certainly helped by high hold percentage (favourable luck), but to be fair, GKL did control its costs reasonably well in first quarter too,” said the JP Morgan team.

GKL is a subsidiary of the Korea Tourism Organization, which in turn is affiliated to South Korea’s Ministry of Culture, Sports and Tourism. The casino operating entity runs three foreigner-only casinos in South Korea under the Seven Luck brand: two in the capital Seoul and one in the southern port city of Busan.

Market-wide, gambling sales at South Korea’s foreigner-only casinos has risen by nearly 16 percent year-on-year in the first two months of 2018 to KRW204.78 billion, Yonhap news agency reported last month citing data from the Korea Casino Association. This increase coincided with a rise in the tally of Japanese visitors to South Korea’s 16 foreigner-only casinos, the report said.

Market-rival casino operator Paradise Co Ltd on Thursday reported net income of approximately KRW3.10 billion for the three months ended March 31, down 61.6 percent from the prior-year period.